 | Weber B. Infrastructure as an asset class: investment strategies, project finance and PPP / B.Weber, H.W.Alfen. - Chichester: John Wiley & Sons, 2010 (2011). - xxi, 262 p.: ill. - Ref.: p.233-239. - Ind.: p.243-262. - ISBN 978-0-470-68570-9
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Figures ........................................................ ix
Tables ......................................................... xi
Preface ...................................................... xiii
Acknowledgements ............................................... xv
Introduction ................................................. xvii
Background and Objectives .................................... xvii
Structure ..................................................... xix
1 Infrastructure - An Overview ................................. 1
1.1 Demand for Infrastructure ............................... 1
1.2 Definition and Characteristics of Infrastructure ........ 7
1.2.1 Infrastructure sectors .......................... 11
1.2.2 Types of infrastructure companies ............... 12
1.2.3 Role of the private sector and PPPs ............. 13
1.2.4 Value added and value chains .................... 14
1.2.5 Greenfield versus brownfield investments ........ 16
1.2.6 Sources of revenue and financing ................ 18
1.2.7 Competition and regulation ...................... 19
2 Infrastructure Investments .................................. 21
2.1 Infrastructure as an Asset Class ....................... 22
2.1.1 Investors in infrastructure ..................... 22
2.1.2 Risk-return profile of infrastructure
investments ..................................... 26
2.1.3 Portfolio diversification through
infrastructure .................................. 36
2.2 Infrastructure Investment Opportunities ................ 40
2.2.1 Listed infrastructure investments ............... 40
2.2.2 Unlisted infrastructure investments ............. 42
2.2.3 Direct investments/co-investments ............... 54
3 Organisational Models of Infrastructure Implementation ...... 55
3.1 Privatisation Models ................................... 55
3.1.1 Formal privatisation ............................ 57
3.1.2 Functional privatisation ........................ 59
3.1.3 Material privatisation .......................... 59
3.2 Partnership Models ..................................... 62
3.2.1 Public Private Partnerships (PPPs) as vertical
or vertical/horizontal partnerships ............. 64
3.2.2 Partial material privatisation as a horizontal
partnership ..................................... 68
3.3 Business Models ........................................ 69
3.3.1 Budget-financed remuneration .................... 69
3.3.2 User-financed remuneration ...................... 70
3.4 (PPP) Contractual Models ............................... 70
3.4.1 PPP contract models in social infrastructure .... 72
3.4.2 PPP contract models for roads and highways ...... 76
3.4.3 Interim summary: various 'privatisation
paths' .......................................... 78
3.5 Financing Models .................................. 80
4 Characteristics of Selected Infrastructure Sectors and
Sub-Sectors ................................................. 81
4.1 Transport .............................................. 82
4.1.1 Cross-sector characteristics .................... 82
4.1.2 Road transport .................................. 87
4.1.3 Rail transport .................................. 95
4.1.4 Airtransport ................................... 102
4.1.5 Water transport ................................ 111
4.2 Water Supply and Sewage Disposal ...................... 119
4.2.1 Characteristics and organisation ............... 119
4.2.2 Sources of revenue and value added ............. 125
4.2.3 Competition and regulation ..................... 127
4.2.4 Privatisation, private sector involvement and
PPP ............................................ 128
4.3 Waste Disposal ........................................ 130
4.3.1 Characteristics and organisation ............... 130
4.3.2 Sources of revenue and value added ............. 135
4.3.3 Competition and regulation ..................... 138
4.3.4 Privatisation, private sector involvement and
PPP ............................................ 139
5 Project Finance ............................................ 141
5.1 Project Finance - History and Basics .................. 141
5.2 PPP and Project Finance ............................... 143
5.3 Basic Structure of Project Finance .................... 145
5.3.1 Characteristics ................................ 146
5.3.2 Project participants and other stakeholders .... 148
5.3.3 Objectives and contributions of project
participants ................................... 154
5.3.4 Typical contractual framework for project
finance ........................................ 156
5.4 Structuring Project Finance - Traditional and in
PPPs .................................................. 158
5.4.1 Phase I - Advisory ............................. 161
5.4.2 Phase II - Project analysis .................... 162
5.4.3 Phase III - Risk analysis and allocation ....... 165
5.4.4 Phase IV - Financing ........................... 184
5.4.5 Phase V - Implementation and monitoring ........ 194
6 Financing Instruments ...................................... 197
6.1 Equity ................................................ 197
6.2 Mezzanine Capital ..................................... 202
6.3 Debt .................................................. 202
6.3.1 Bank loans ..................................... 203
6.3.2 Bonds .......................................... 206
6.3.3 Short-term finance ............................. 207
6.4 Government Support Schemes ............................ 207
6.4.1 National development banks ..................... 208
6.4.2 European Investment Bank ....................... 211
6.4.3 European PPP Expertise Centre (EPEC) ........... 213
6.4.4 European Commission ............................ 214
6.4.5 Governmental export credit and direct
investment insurance - ECAs .................... 214
6.5 Asset-Backed Securities ............................... 215
6.6 Sale and Leaseback .................................... 217
6.7 Derivatives ........................................... 217
6.7.1 Futures ........................................ 218
6.7.2 Options ........................................ 219
7 Cash Flow Calculations and Sensitivity Analyses ............ 221
7.1 Items Requiring Inclusion in Cash Flow Analysis ....... 221
7.1.1 Cash flow modelling ............................ 224
7.2 Present Value and Discount Rates ...................... 225
7.3 Analysis of Financial Covenants ....................... 226
7.4 Sensitivity Analysis .................................. 229
References .................................................... 233
Further Reading ............................................... 241
Index ......................................................... 243
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