Strategy and investment criteria
SEIEF invests in low risk infrastructure projects with stable long-term returns, including renewable energy projects, located in South Europe.
SEIEF has acquired a portfolio of 16 diversified infrastructure projects offering a low risk profile. SEIEF has focused mainly on medium size investments in order to meet its diversification objective. SEIEF has invested only in Greenfield projects (at a development/construction stage) where opportunities of value creation in the medium term are more important.
Main investment criteria applied by SEIEF for the implementation of its strategy :
1) Focus on the following infrastructure sectors under PPP or similar schemes with the objective of diversification among the various sub-sectors, and in particular:
health: hospitals, medical centres
public buildings: administrative buildings, universities, prisons, etc..
transportation: streetcars, subways, roads, highways, rail tracks, etc ..
telecommunications: network infrastructure, CCTV surveillance, toll and levy networks
rolling stocks for metros and rail tracks
renewable energy: solar, wind, etc..
2) Focus on the South European region with also a diversification objective to some extent between the various targeted countries:
- Other neighbouring countries on a very selective basis.
3) Interest in projects offering a limited risk profile with the following characteristics :
- partnership with experienced industrial companies offering adequate contractual pass-through mechanisms
- the financial package needs to be committed prior to SEIEF’s disbursement,
- almost all the necessary authorizations already obtained for the implementation of the project and the whole contractual documentation also in place,
- stable cash flows during the life of the project or the concession : preference for projects offering strict PPP features; meaning projects carrying limited market risk or traffic risk but with availability and performance risk.
4) Projects with value creation opportunities in the medium term:
greenfield projects which valuation increases upon construction completion,
brownfield projects only if specific value creation features.
5) Projects in which SEIEF will have the ability to exert some protection through management:
preference for project companies enabling SEIEF to exert management control on the budget,
in case of minority ownership, requirement to be represented on the board at project company level.
The Public Private Partnership ( « PPP ») operations
Initiated in the United Kingdom 20 years ago under the term PFI ( Private Finance Initiative ), the PPP is the mean through which the public sector ( governments, local authorities ) entrusts to the private sector the realisation of an equipment traditionally under the responsibility of the public sector ( typically hospitals, schools, prisons, bridges, tunnels, roads, highways, rail tracks, telecom network infrastructure, etc.. ) with a clear allocation of risks among the various parties involved.
The main aspect of a PPP transaction is the transfer by the public sector of the construction and management of the project to a private entity during the whole life of the PPP contract. The private entity receives during the whole life of the PPP contract an annual revenue paid by the public authority which amount is based on the availability and performance of the equipment built and operated by the private entity.