Strictly Private and Confidential Workshop on Large Project Finance Alastair Campbell Director – Project Finance Standard Bank – Corporate & Investment Banking Division Maputo, 31 May & 1 June 2007 Table of contents 2 Page Table of contents 2 Standard Bank around the globe 4 Projects on which this presentation has been based 6 The Nature of Mozambique’s soon to be developed Large Project Finance 8-9 Recommendations 11-12 Conclusion 13 Workshop on Large Project Finance – May 31 & June 1 3 The Standard Bank Group An overview of the banks global presence The Standard Bank Group 4 The Bank Corporate and Investment Banking Division of Standard Bank Standard Bank Around the Globe Rooted in Africa, with strategic representation in key sub-Saharan markets, Standard Bank is a regional banking force with a global sweep. Standard Bank Group Market capitalisation as at December 2006: R113 billion Retail banking Internationa l Stanbic Africa Corporate and Investment Banking Banking, investment, insurance and other financial services to individual customers, the agricultural sector and small and medium-sized enterprises throughout South Africa Investment banking activities and private banking through offices in 21 countries outside Africa Retail, commercial and investment banking services in 16 countries outside of South Africa Commercial and investment banking services to larger corporates in South Africa, foreign banks and international counterparts. Liberty Group Value-added financial and non-banking services both locally and internationally STANLIB Management of institutional and retail funds, investment portfolio’s and financial product development Standard Bank has operations throughout the world, operating in 38 countries outside of South Africa. Property-related finance and advisory services and management of industrial, office, retail, specialised property and wholesale residential development Interesting Facts • 39,080 employees including Liberty Life, 31,905 in South Africa • Represented in 39 countries with an emerging markets focus • Over 700 branches in South Africa, 234 in the rest of Africa • Over 3,000 ATMs in South Africa, 314 in the rest of Africa • ZAR593 billion in assets • Market capitalization of ZAR113 billion Workshop on Large Project Finance – May 31 & June 1 5 Projects on which this presentation has been based Tombstones Tombstones of projects on which this presentation has been based 6 Mozal I Mozal II Sasol Natural Maputo Port Gas Project Privatisation Club participant Club Participant Lead Arranger Financial adviser and Underwriter of and Underwriter of and And arranger to ECA tranche ECA tranche Underwriter MPDC CMG Motraco Marromeu Financial adviser to ZAR 1.08bn Financial adviser to Lead Lender CVRD on IBFS Equity finance Motraco Moatize And Development Plan And Arranger Workshop on Large Project Finance – May 31 & June 1 7 Mozambique's Large Project Financings Characteristics of the soon to be developed mineral and energy projects Characteristics of Mozambique’s large Project Financings 8 Geographic The remote nature of most of the projects brings its own challenges:  Need developers who have significant appetite and balance sheets  Mobilisation and demobilisation costs become relevant  Lack of supporting infrastructure in the project/concession area Inter modal and nodal considerations Many of Mozambique's large projects form part of Corridor developments  Energy projects: Generation linked to Transmission development  Mineral projects: Route to port becomes an issues (Moatize, CSL, Riversdale)  A coordinated approach is critical  Inter-ministerial considerations Cross border nature of projects Increases the complexity of the projects  International lawyers are necessary  Dual currency considerations (Eskom now insisting on paying for power in ZAR)  Bankability  NMPD and the inter governmental and utility issues Characteristics of Mozambique’s large Project Financings 9 Mineral and energy focus Many of the projects are being developed in these sector areas  Mineral developments are focussed on the Tete province  Supporting infrastructure needs in the area are significant  Resettlement and social upliftment in the region is a prerogative Workshop on Large Project Finance – May 31 & June 1 10 Lessons that can be learnt from previous projects Characteristics of the soon to be developed mineral and energy projects Recommendations 11 Recommendation 1 2 3 4 Rationale Appoint appropriate advisers  Financial  Technical  Environmental  Legal   The cost benefit of such an approach is tangible Maputo Port took 5 years to close with a few hiccups along the way The same size does not fit all?  Project Financings are different in each case  Transport concession arrangements  PPP standard documentation is unlikely to work  A bespoke solution is likely to be needed for each project Creation of IAC is a good thing  Creation of a co-ordinating body that oversees the development from the governments perspective  IAC members must be empowered to make decisions on behalf of the ministries/entities to which they report Timetable  Create an investor friendly environment  If a developer knows the government is committed to a timetable then it will be more likely to come to Mozambique Recommendations….(continued) 12 Recommendation 5 Strong Individuals?  Sometimes big egos get in the way of good projects Rationale   Doing business in Africa is not the same as for example Europe or the US A lot of patience is required Workshop on Large Project Finance – May 31 & June 1 13 Thank You Relevant contact persons at Standard Bank 14 Address Corporate and Investment Banking Division of Standard Bank Alastair Campbell Greg Babaya Director – Investment Banking Energy Sector focus Project Finance Director – Investment Banking Energy Sector focus Project Finance Contact: Email: Contact: Email: +27 11 636 6416 alastair.campbell@standardbank.co.za +27 11 636 7446 greg.babaya@standardbank.co.za 3 Simmonds Street Standard Bank Centre Johannesburg 2001 South Africa Greg Ansermino Jonathan Wood Director – Investment Banking Mineral sector focus Director – Project Finance Infrastructure sector focus Contact: Email: Contact: Email: +27 11 636 1004 gregory.ansermino@standardbank.co.za +27 11 636 0964 daniel.zinman@standardbank.co.za