The document discusses the role of investment banks and investment bankers. It covers various topics related to investment banking services including expertise, relationships, organization structure, fees, required skill sets, and mobility of skills. It also discusses clients that investment banks work with including corporates, governments, investors, banks, and internal management. The key services provided by investment banks are outlined as advisory, research, valuations, acquisitions, capital structuring, capital raising, and underwriting. The document emphasizes that investment banking requires critical thinking skills, market analysis skills, and the willingness to go the extra mile for clients.

1. 6 June 2012
Role of the Investment Bank
Adam Nicolopoulos, President & CEO

2. Investment Bank & the I-Banker
Function & Services
Expertise
Relationships
Organization & Groups
Fees
Skill sets
Mobility of Skills
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3. How I got here from there…
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4. Clients – upstream, downstream & internal
Corporates (buy side / sell side)
Governments / public sector (sell side)
Investors
Banks / Peers
Internal
Management
Colleagues
Team peers
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5. Investment Banking Services
Advisory
Research
Valuations
Credit rating
Acquisitions
Negotiations
Capital structuring
Tender management
Capital raising
Financial implementations
Market sounding
Debt issuance and underwriting
Equity
Debt
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6. Key Lessons Learned
The Conductor
More than Economics
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7. May opportunities…but beware of the risks…
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8. Infrastructure Characteristics & Drivers
Investment drivers Key project attributes / comments
High barriers to entry
Defined risk profile Monopolistic characteristics
Capital intensive
Facilitators of
Importance / necessity Strategic links
economic growth
Contract amounts Sizeable $200 – $multi-billion
Well / reasonably Established traffic pattern
Business model
defined risk profile
Industry growth rate Revenue growth expectation
Attractive IRR and upside potential
Return on investment
Scope for additional revenues
Stable, predictable, 20–50 years and up to 99 years
Cash flow quality
long-term investment
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9. Clients – Project sponsors – a diverse
universe...
Contractors Asset Operators
ACS Dragados Port operators (PSA)
Vinci Road operators (Autostrade)
Bouygues Airport operators (TBI)
Sanska Rail Operators (Virgin)
Bank
Fluor… Others
Corporate
Developers Financial Sponsors
Relationships
Cintra Infrastructure Funds
Abertis Pension Funds
Hochtief PPP Private Equity
Macquarie Institutional investors
Serco and others
…parties who DEVELOP…and of course, Governments and the Public Sector
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10. Multiple Sectors
Single Purpose Company
Greenfield / brownfield
Project versus Corporate
Pros & Cons
Long term cashflow prospect
Size - $20 million - $ billions
Infrastructure & energy
High barriers of entry
Monopolistic characteristics
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11. The Market & Participants (sample names)
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12. Skill Sets
Analytics
Negotiations
Presentation
Risk analysis / assessment
Excel
Client management
Capital structuring
Documentation
Critical thinking /
Expressing yourself
ideas & concepts
… and lots of other skillsets
Market analysis
Credit skills
BUT …..
Are you willing to go …the extra mile?
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13. How are the parties organized?
Project team & advisors / areas of expertise
Financial Revenue Technical Insurance Legal
Capital Providers
Owners
Other investors -
Sponsors – Equity sponsors
Technology PPA/ Offtake Utility / Industrial
Supplier Agreement Client
Fixed Price Operations and
Project Company
Contractor Construction Maintenance Operator
Contract - SPC Agreement
Credit Agreement and Security
Senior debt
Fees
Byproducts/ Enabling providers / bond
legislation
Services holders
State – governance Permits
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14. Typical Cash Flow Profile – Greenfield Project
800
600 This image cannot
currently be display ed.
400
This image cannot
currently be
display ed.
Millions of US$ nominal
This image cannot
currently be display
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
year of concession
(200)
Opex Capex
(400)
Senior debt interest & fees Senior debt repayment
Dividends Tax
(600)
Equity subscribed Debt drawdown
Total Revenues
(800)
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15. Brownfield Project – Operating Asset
800
600 This image cannot
currently be display ed.
400
This image cannot
currently be
display ed.
Millions of US$ nominal
This image cannot
currently be display
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
year of concession
(200)
Opex Capex
(400)
Senior debt interest & fees Senior debt repayment
Dividends Tax
(600)
Equity subscribed Debt drawdown
Total Revenues
(800)
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16. Capital Structure and Providers of Capital
NewCo – Project Co
Equity investors Debt lenders
(10% — 30%) (70% — 90%)
Candidates
— Project sponsors
— Project vendors
Bank market Capital markets
— Operators
— Financial
investors Syndicated loan Bond issues
market — TIFIA
or — 144A
Credit — Bonds
IPO / Equity capital
enhancement — Monoline wraps
markets
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(1) Does not include public sector support (grants or guarantees)
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17. ...so how do we establish the cost of capital?
Equity: Debt:
Shareholders / financial investors Lenders / debt capital markets
Benchmark + Margin
Expected Returns All in Cost of Debt
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18. ...so how do we establish the cost of capital?
Equity: Debt:
Shareholders / financial investors Lenders / debt capital markets
Risk free rate (treasuries) Risk free rate (treasuries)
+
+
Construction risk
+ Project risk premium
Revenue model
+
+
Operation risk Swap rate
+
+
[Seniority]
+ [Premium]
Ownership premium
Expected Returns
Margins [250 – 400bp]
IRR [12% – 28%]
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19. Advisory Team – coordination
Financial Advisor – Provides analysis and advice regarding
financial and commercial aspects of
Tender coordinator
project / valuations
Bid documents & negotiations
Engineering Consultant Establishes scope and specifications of
construction and operations work
Assists preparation of bid documents
Traffic and Revenue Consultant Provides project traffic and revenue
projections to support
others…
Legal Consultant & others… Provides legal guidance
Assists preparation of bid documents
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20. Background: 2005 – 2007
BARRON’S, May 8, 2006
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The Bond Buyer, Mar.27, 2007 BusinessWeek, May 7, 2007
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21. Background: 2005 – 2007 – the “Feast” years
♦The investors discover US infrastructure
♦Macquarie/B&B model & financial engineering
♦Low interest rate environment & availability of debt
♦Banks with underwriting capacity
♦Abundant equity
♦High multiples and “rosy forecasts”
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22. US Investment Banking Approach
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23. Chicago Skyway Projected Traffic and
Revenue
Toll Rates Projected Gross Toll Revenue
($ in millions) ($ in millions)
$6.00 3,500 Project ed Gross Toll
Thereafter, tolls
rise annually at WSA Base
maximum of: 3,000 WSA Alt ernat ive
5.00 a) GDP
b) CPI
c) 2% 2,500
4.00
2,000
3.00
1,500
2.00
1,000
1.00 500
0.00 0
1992 1996 2000 2004 2008 2012 2016 2005 2014 2022 2030 2039 2047 2055 2064 2072 2080
♦ Assuming 3% inflation, toll increases in real terms from $2.00 to
$3.04 in year 50
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(1) Wilbur Smith Associates April 2004 forecast at then current $2.00 toll; through 2020 then grown at 1.5%.
(2) Wilbur Smith Associates April 2004 forecast at programmed toll increases; through 2020 then grown at 1.3%.
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24. Chicago Skyway Sale
♦ Macquarie Infrastructure Group (45%) and Cintra (55%) purchased a 99-year concession
for $1.82 bn
♦ Acquisition financing: $1 bn of debt + $800 m of equity
♦ Refinancing (less than a year) of $1.4 bn of debt (FSA wrapped) + $400 m of equity
♦ In the market to monetize depreciation ($200 – 300 million)
♦ Asset overview
— 7.8 miles elevated roadway / 3 lanes in each direction
— Current tolls are $2.00 per car and $1.20 per truck axle
Toll Schedule
Passenger
US$2.00 US$2.50 US$3.00 US$3.50 US$4.00 US$4.50 US$5.00 + greater of 2% or CPI or nominal GDP/capita
cars
Nighttime
Trucks— US$1.00 US$1.20 US$1.80 US$2.40 US$3.00 US$3.50 US$4.20 + greater of 2% or CPI or nominal GDP/capita
per axle
2005 2008 2011 2013 2015 2017 2020 2023 2026 2029 2032
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25. 2009:
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26. The Present – Debt markets
♦Cost of debt is very high
♦Credit is now scarce
♦Demise of monolines - difficult to reach investment
grade
♦Flight to quality
♦Only the highest quality projects are funded
♦Fewer players – withdrawal of foreign banks
♦Shortage of underwriting
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27. The Equity market
♦Debt pricing approaching cost of equity
♦ 7 - 8% cost of debt
♦Equity is “repricing”
♦Infrastructure funds’ loss of value
♦Lower multiples
♦Equity is …standing by, but not ready to take action
♦Emergence of new generation of infra funds
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28. Equity Funds
♦Evolution of equity returns
♦Infrastructure: not recession-proof
♦New fund structures
♦New Players
♦Pension funds
♦Private Equity
♦More conservative capital structures
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29. Lessons Learned (…not Murphy’s Laws)
Aim for win – win
Know what you … do not know
It is about people
Always keep your cool, it is not
about you
Beware of … HUBRIS…
Do not forget to be …. HUMBLE
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30. ADN Capital Ventures, Inc.
ADN Capital Ventures, Inc. (“ADN”) delivers financial advisory services to clients who are developing,
financing and implementing transportation, energy and other related infrastructure projects in the
private and public domains. ADN is led by seasoned investment bankers and finance professionals
in the global capital markets with a successful track record in project execution and wealth of
corporate relationships.
As an independent advisor, ADN focuses on its clients’ interests and provides advice to assist clients
in optimizing and achieving their financial and commercial objectives. Our practice includes strategic
advisory and project development services with an office in San Francisco and presence in Europe.
Our team has hands-on experience in a variety of projects such as public-private partnerships (“PPP”),
long-term concessions, public projects and privately developed projects, including independent power
projects, in the United States and internationally. We deliver expertise and provide advisory services on
all aspects of infrastructure finance and project development to a broad range of clients. At the same
time our team offers M&A and capital raising consultancy services as necessary.
Having operated in over 20 countries, the ADN team brings experience in what makes projects
succeed. Over the last two years our advisory practice has grown, and we currently provide
advisory services on a transaction portfolio exceeding $2.5 billion of aggregate investments.
Adam Nicolopoulos
President and Founder,
Phone: +1 415-785-4613
Cell: +1 415-246-1765 Suite 7
Fax: +1 415-532-2873 810 College Avenue, Kentfield
E-mail: anicolopoulos@adncv.com California, 94904
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31. Adam D. Nicolopoulos
♦ Involved in over 60 project finance /private finance /concession type transactions in the US and
internationally;
♦ Total transactional experience exceeds $45 billion of total investment value;
♦ Visiting Scholar at Stanford University’s Collaboratory for Research on Global Projects since
November 2007;
♦ Two international “deal of the year” awards for novel infrastructure deals: 2003 and 1997;
Adam has spent well over 18 years with UBS Investment Banking Division (London, Zurich, New York
and San Francisco) focusing on funding transportation infrastructure and energy/power generation
assets. His clients included private sector developers, contractors, government authorities, and public
bodies. In addition to UBS, Adam worked for NatWest Markets (presently known as RBS) from 1994 until
1997 in London in its project advisory group and with Mission Energy (1994).
On the private side, he has advised investors, international contractors and developers in structuring
optimal financing solutions (bonds, bank debt and/or equity financing) and successfully implementing
financings. In the US, he advised on over 10 PPP/PFI and concession deals, including advising bidders
on tenders for the Indiana Toll Road and Northwest Parkway and the development of two greenfield
container port terminals in the Gulf of Mexico. His services included advising public authorities and
government enterprises, (NJ DOT), on the application of suitable public-private partnership models for
their infrastructure sector.
Mr. Nicolopoulos holds an MBA from Stern School of Business at NYU (honors / full academic
scholarship), an MSc in Mechanical Engineering from the University of California, Berkeley (honors) and
a BSc in the same field from Columbia University. Certifications include Series 7 and 63. He has spoken
at over 30 national and international conferences on topics relating to PPPs and financial innovation.
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32. Sample
deals
♦ Expert witness on an international arbitration case involving a major multi-billion euro road infrastructure project in
Europe.
♦ Advised a major electronics conglomerate on a M&A buy-side mandate in the US solar renewable sector.
♦ Advised a solar PV project developer on structuring and raising funding (equity and debt) toward the development of
utility scale projects (around 25 MWs each).
♦ Advising on finance strategy and capital raising for start-up technology companies active in the clean & green tech
renewable sectors.
♦ Advising Sea Point LLC (www.sea-point.net) a private company on the development, structuring and procurement of
both equity and debt financing for a private 900,000 TEUs (twenty-foot equivalent unit) container trans-shipment port
facility in Venice, Louisiana.
♦ Advised CalTrans (California DOT) on efficient development of solar power projects on sites and land controlled by
the agency;
♦ Advised Solyndra on project transactions;
♦ Was involved from the outset in the formation and launching of a $2 billion private equity infrastructure fund targeting
the public pension funds in the US and Canada.
♦ Member of an advisory team working with TxDOT on the application of PPPs and road concession contracts in
Texas.
♦ Advising a Caribbean government (confidential) on its national debt restructuring and application of public private
partnerships (PPPs) on key transportation infrastructure assets (including an airport, a port, a ferry passenger
terminal, and others).
♦ Developer (confidential) on strategy, capital (debt and equity) and financing of 94 MW wind farm portfolio (four wind
farms) in Europe.
♦ Advised a major international concession/development company on positioning for major infrastructure and PPP
projects in Europe.
♦ Advised Halivourgiki, one of the largest industrial groups in Greece, on the development, strategy and financing of an
880 MW gas fired power station in Greece and their negotiations with partners as co-sponsors.
♦ Advised an international road operator (confidential) on their tender for the Alligator Alley Road, Florida.
♦ Advised Dragados SPL on its tender for the acquisition of a container port terminal in the Mediterranean Sea.
♦ Advised on the successful sale of an ownership interest in a 17.85 MW wind farm under development (fully permitted)
in Greece. Assignment included the selection of and negotiations with strategic international investors.
Driving • Integrity • Excellence
• Character • Independence
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Values • Commitment • Social responsibility
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