Slide 1 kos Csobdi, 01.10.2013. Regul ulato atory ry envi - - PowerPoint PPT Presentation

Slide 1 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Regulatory environment for investors and banks

5th Annual Wind Energy in Hungary Workshop 1th October, 2013

Csobádi Ákos Head of Project Finance and Syndications Department Raiffeisen Bank Zrt.

Slide 2 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary

Slide 3 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary

Slide 4 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Rene newable wable ene nerg rgy count untry ry attractiv activenes eness s ind ndex, , 08/20 2013. 13.*

Rank Country Onshor hore wind 1 US 74,2 2 China 71,2 3 Germany 68,4 4 UK 66,2 5 Canada 64,2 6 Australia 63,2 7 Japan 60,3 8 France 60,3 9 Ireland 60,3 10 India 60,2 11 Denmark 59,8 12 Sweden 59,8 13 Norway 58,9 14 Finland 57,8 15 Netherlands 57,5 16 Belgium 57,3 17 Polan land 57,2 19 Italy 56,6 20 Spain 56,4 21 Austria 56,3 22 Portugal 56 23 Turkey 55,4 28 Roman ania ia 53,3 33 Czech 49 49 35 Bulgari aria 48,2 36 Ukraine ine 46,1 37 Greece 45,6 39 Slove venia 43,2

* source: Ernst & Young This index was introduced in 2003 and is the weighted average of several criterias including power offtake attractiveness, strength of natural resources, technology parameters, etc. Hungary had been ranked until 06/2012 (last ranking: 39th out of 40 countries), but was taken out, because of several reasons, including: cuts in government support and little progress in the recent years.

Slide 5 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Ambitions are/were there in Hungary, too!?

N ational renew able action plan 2010

300 400 500 600 700 800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year M W

Source: http://ec.europa.eu/energy/renewables/action_plan_en.htm

Slide 6 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary

Slide 7 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Key questions for investors, basic factors

• 1. Locatio

ion/w n/wind ind OK OK

• 2. Elect

ctrici icity ty network k capabili ility ty OK OK The electricity network is capable of receiving a total of approximately 740 MWe of wind power. If network developments will result in an improvement in the controllability of the system, then the establishment of further capacities will be possible.

Slide 8 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Key questions for investors, regulations

3/a. . Permits its OK OK Permitting proccess could be shorter/less difficult, but generally ok. 3/b. . Grid d connect ectio ion n not OK Last valid tender for grid connection in 2006, hopefully new tender will come in the near future. 3/c.

• c. Feed-in

in tariff iffs s not OK Waiting for the new regulations (METÁR), long-term (at least 10 years, but preferably more), above-market traiffs can result in postive NPV 3/d. . Other regulat ulations

• ns Managable

le i.a. variation from the planned output can be fined

Slide 9 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Other questions for banks

Sponsor Cash Flow Equity Collateral

Experienced sponsor with solid financial background Income: capacity * wind * tariff, tarif iff f should ld be based on solid d regula lation tions s and/or /or agreeme ment nts s for

• r the whole tenor of the loan

(10-15 15 years)! )! Costs: not the main question here Subject to CF, Sponsor, but min. 20-30%, max. 50%, state subsidy is not equity, but not loan! Mainly non-recourse, Pledge/call option on shares, assets (including land plot), receivables, contracts.

Slide 10 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Corporate lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary

Slide 11 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Corporate lending in Hungary vs. other countries

Sources: MNB, ECB, national banks Bulgaria, Poland, Romania +10-17% Slovakia, Czech Republic, Euro zone

• 3-13%

Baltic states, Hunga gary

• 25-27%

Slide 12 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Conditions of restart of financing new windparks

Willingness of investors to invest in Hungarian energy sector Lower funding costs (incl. CDS of Hungary) and/or subsidized funding (see Funding for Growth and EIB frame) Stable ble regulations gulations (inc ncl.

• l. taxes)

xes), , whi hich ch can n be be relied lied on n fo for long ng term rm

Slide 13 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

MNB Funding for Growth

Entitled deals: not restructured SMEs (max. EUR 50 mio Net Income or max. EUR 43 mio Total Assets and max. 250 FTEs) Interest margin: max. 2.50% p.a., fee: 0% Loan amount: HUF 3 mio. - 3 bio. Length of the tenor: max. 10 years Period of the program: 01.10.2013 – 31.12.2014

Slide 14 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary

Slide 15 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Proj

• ject

ct Finance nance and Syndicatio dications ns : brief ef introdu troduction tion

Key y activiti ities: es:

 Real-estate investment & development finance and leasing  Leveraged finance  Acquisition finance  PPP & Project finance (inclu ludin ding g energ rgy y sector tor deal als)  Syndicated lending, club loans, collateral pools,  Lender of record transactions  Agency services for syndicated loans

Loan an portfolio rtfolio (draw rawn amou

• unt)

nt): : c. HUF UF 230 230 bn bn FTEs Es: : 20, inc ncl. . 4 FTEs Es for

• r syn

yndicat dications ions

Slide 16 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Proj

• ject

ct Finance nance, , Syndicatio dications ns and d Real Esta tate te Leasi asing ng

Strong track record

Our predecessor department called Project Finance & Syndications has been established in 1999, meaning that we have more than a decade long track record at the local market

Custo tome mer r focus

From existence we have been building long-term customer relationships, resulting that we act as home-bank for most of our customers

In In-de depth pth industr try y expert rtise

Colleagues are specialized for a limited number of industries, thus can demonstrate in-depth knowledge and experience in those, as well as, Raiffeisen Banking Group owns SPVs executing equity investments on proprietary accounts in real estate and energy rgy industry dustry (develo loped 53 53 MW+ MW+ wi windp dparks in in Hun unga gary ry), which provide supplementary know-how for lending

Strong ng parent t backgro round und

Raiffeisen Bank International AG, as parent, secures further enhancement to large-scale lending activity in form

• f regional expertise and extended underwriting capacity

Extended ded network

RBI Group operates an extensive network in CEE, SEE and CIS covering 17 countries, which reveals as major advantage for customers making business in this region

Project ect Finance ce and Syndicat icatio ions s Departm tmen ent

Slide 17 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

EIB frame via Raiffeisen Bank

Purpo pose Financing of energy y efficency cy programm mmes s and green energy y investme tments ts in Hungar ary Frame amount EUR 50 mio Currency EUR/HUF Hitelösszeg

• Max. EUR 12.5 mio

Non-refundable EU subsidy

• Max. 14% (max. EUR 140 th) of the loan amount

Final completion date 15th June, 2015 Total project cost

• Max. EUR 25 mio

Project criteria: Energy saving of 30% p.a. OR min. 20% decrease in output of gases strengthening the green-house effect Tenor

• Min. 4 years

Pricing Tailor-made, but below standard market pricing

Slide 18 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary

Slide 19 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Summary

 Large scale ambitions (330MW => 750MW), but low output in recent years  Conditions of launching new projects are partly fulfilled, but tender for grid connections and stable long-term regulation are missing  Corporate lending in Hungary declined, but this trend can be reversed (see MNB Funding for Growth)  Raiffeisen Bank has special project finance team (and experience in wind park financing/development) and subsidised funds from EIB/MNB/MFB => want to be one of the first banks, which lends the new windparks in Hungary!

Slide 20 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Raif iffeise feisen Bank nk Zrt. Akadémia utca 6 1054 Budapest, Hungary Phone: +36 1 484 - 4529 Fax: +36 1 484 4444

E-mail: akos.csobadi@raiffeisen.hu

Questions now or later?

Slide 21 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks

Disc

scla laimer mer

Presentat sentation ion - Raiff ffeis eisen en Ba Bank Zrt. t.

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• bligation and/or assuming any liability of any nature by Raiffeisen Bank Zrt.

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Project ect Finance ce and Syndicat icatio ions s Departm tmen ent