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Financing Sustainable Infrastructure

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Mariana Silva

on 14 January 2015

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Transcript of Financing Sustainable Infrastructure

Financing Sustainable Infrastructure
Mariana H. Silva
Sustainable Finance Officer
Sustainability Impact
Improved Reputation
Value flows from infrastructure sustainability to Total Shareholder Returns
Employee Engagement
Cost efficiency
New markets increased market share
Reduced risk
Social License to operate
Value creation
Pricing Power
Cost saving
Source: Cooperative Research Center for Infrastructure and Engineering Asset Management (CIEAM)
New sources of revenue
Access to capital
Bran strength
risk premium
Margin improvement
Revenue Growth
Market valuation multiple
Increased profit
Free cash flow
Total shareholder return
Sustainable finance products Infrastructure
Source: McKinsey Global Survey results
Investment professionals, and finance executives found they agreed, by a large margin, that improved corporate reputation and image is the most important way sustainability programs create value
Trends in Sustainable Finance
Provision of financial
and financial
management services in a manner that provides for
economic growth
social justice
and stewardship of the
natural environment.

IISD defines sustainable finance as
Project Finance
Private Equity

Project Finance
Loans offered in wholesale banking to fund large infrastructure projects based on the PV of FCF
Under a project finance arrangement there is a mix of equity and debt
International trends
BNP Paribas - France
Rabobank - Netherlands
Barclays - United Kingdom
Fortis - Canada
WestLB - Germany
JP Morgan - USA
Specialized service division dedicated to long term financing of clean energy projects
let's talk numbers
JP morgan's renewable energy portafolio now comprises 1USD billion of investments in 26 wind farms since inception in 2003
Eco- securitization
Green mortgage-backed securities
Trends in sustainable structured products
Package mortgage buildings that meet specific energy -use and enviromental benchmarks
Higher rating as a result of the operational benefits associated with green buildings
Asset backed securities using as an underlying sustainable infrastructure projects
Sustainable management of resources with the funding capacity big infrastructre projects
IFC serves as a guarantor absorbing the mezzanine level of risk
Green Bonds
USA Act 2004. The amendment is officially titled the Brownfields Demonstration Program for Qualified Green Building and Sustainable Design Projects
The tax-exempt status makes purchasing a green bond a more attractive investment when compared to a comparable taxable bond.
In USA To qualify for green bond status

1) At least 75% of the building is regist ered for Leadership in Energy & Environmental Design (LEED) certification

2) The development project will receive at least $5 million from the municipality or State

3) The building is at least one million square feet in size, or 20 acres in size
Forest Bond - Latin America
Cat Bonds - Global
Design to fund large scale reforestation in Panama
Private equity

Citigroup -
special desk for investing in wind, solar and biofuels enterprises
Bank of America -
Private equity focused on forest conservation and preserving biodiversity
BNP Paribas
Goldman Sachs
Provide ancillary capital for risks from natural catastrophes.
Can pay high yield compared to average yield
Full transcript