UK Export Finance Insight into UKEF’s Mandate, Sectoral Activity & Product Suite Richard Simon-Lewis Head of Origination, Client Coverage, Marketing & Communications, UKEF 27th June, 2019

About UK Export Finance We are the UK’s export credit agency, and a Government department, established in 1919 as the world’s first export credit agency. We have nearly 100 years’ experience in helping UK companies to export their goods and services overseas. We play a central role in the Government’s trade and export ambition, working with colleagues in DIT, DFID, FCO, HMT and other departments in the UK and overseas. We do this by providing insurance and other financial support which complements, not competes with, what is available from the private market. We can support exports for any size of company and across all sectors, from capital goods to services and intangibles such as intellectual property. Our mission is to ensure that no viable UK export fails for lack of finance or insurance from the private sector, while operating at no net cost to the taxpayer Global Trade Review: Best Export Credit Agency Award 2018 Trade Finance Awards: Best Export Credit Agency Award 2018

Our support helps UK exporters… WIN CONTRACTS: We offer long-term financing to overseas buyers that makes UK companies’ offerings more competitive, allowing buyers to spread their capital costs whilst exporters receive payment on delivery. FULFIL CONTRACTS: We help exporters access working capital needed to fulfil export contracts, or reduce cash deposits required for contract bonds, giving them the ability to take on more contracts and increase turnover. GET PAID: We help exporters and investors manage risks in challenging markets with our insurance products, where the private market is not able to offer insurance.

Key considerations for medium – long term financing We can support both public and private sector transactions, project financing (including PPP), Islamic Financing (Sukuk) and Debt Capital Markets refinancings. We operate within the conditions set out under the OECD “Arrangement on Officially Supported Export Credits” Repayment tenors are usually 2 – 10 years; certain sectors benefit from extended repayment terms (aircraft – 12 years; rail – 14 years; nuclear power – 18 years; water and renewables projects – 18 years) Large projects must meet environmental, social and human rights standards set by the IFC and Equator Principles Support in some markets is subject to the OECD Sustainable Lending Principles. As per the OECD Arrangement, support for Local Costs are limited to up to 30% of the value of the exported element Cost of Cover: We charge a premium for our medium-long term support based on benchmark rates set by the OECD, and calculated on a case by case basis, taking into account factors such as credit risk and loan tenor Premium is a one-off charge which is separate from interest charged on the loan, and can be paid up front or funded from the loan

Local currency financing UKEF is able to guarantee a buyer credit loan to an overseas borrower in a local currency, financing the purchase of goods and / or services from a UK exporter. Guarantees can be issued for loans in over 60 different currencies. Local currency financing is particularly useful for projects which do not usually generate foreign currency revenue. For the overseas borrower, it reduces foreign currency risk and avoids a variable debt service cost. Key LCF available LCF available on a case by case basis Not shown: Mauritian rupee Trinidad and Tobago Dollar

UKEF 2020: the scale of ambition UK Government’s ambition is to grow exports to: of UK GDP (up from 30%) 35% UKEF’s total capacity to support exports: UKEF’s remaining capacity to support exports £20bn £50bn The amount of its £50bn risk capacity currently utilised £30bn

79% of exporters benefiting from our support were SMEs 2018-19: key results A record £6.8 billion in support of 262 companies’ exports to 72 countries – and supporting 47,000 UK jobs 79% of exporters benefiting from our support were SMEs Provided £587 million in direct lending – as well as adding £2 billion in capacity for 2020-21 and 2021-22 £17 billion of support provided over the last five years for UK exporters We connected over 300 companies with international opportunities through our supplier fair programme

UKEF in action US$870m loan for the US$19bn Sadara petrochemical project in Saudi Arabia, supporting exporters including Foster Wheeler, Jacobs, and Fluor $913m Sharia-compliant asset financing for four A380s for Emirates: the first Sukuk certificate issuance guaranteed by an ECA US$400 million in support of a GE Oil & Gas contract for Ghana's Offshore Cape Three Points Project €54m reinsurance for the UK element of the construction of an airport terminal in Dar es Salaam A £14.1m buyer credit facility for provision of subsea equipment to the oil and gas sector in Nigeria As a result of UKEF support, 210 rural bridges in Sri Lanka have been installed by Mabey Bridge and Cleveland Bridge.

Track record in supplying range of transaction structures Corporate/ Sovereign Loans We can provide finance to both public and private sector buyers of UK exports We can support Project or Structure Finance deals as well as Public Private Partnership structures UKEF can also structure a facility on a line of credit basis to enable multiple purchases from different suppliers In addition to standard bank financing, our repayment guarantees can also be provided to non-bank financial institutions or cover bonds issued to refinance the loan UKEF was the first ECA to provide guarantee support for a Sukuk issuance, allowing the borrower to access the Islamic financing market alongside traditional investors PF & PPP Lines of Credit Debt Capital Markets Islamic Finance The ability to deliver on complex transactions and offer a variety of financing options ensures UKEF is able to provide the most effective form of support for projects

Support in connecting with the UK supply chain

HM Government Export Strategy: Supporting & Connecting Companies to Grow on the World Stage There is a world of opportunity for UK exporters

Leading with Finance – Overseas Network UKEF ‘leads with finance’ to help UK exporters capture opportunities Export contract negotiations – exporter bid includes expression of interest Overseas Buyers UK Exporters Working capital and bonding products Buyer finance products IEFEs/Posts to source opportunities UKEF to engage with UK exporters Sector teams interrogate UK supply chain UKEF Expression of interest EoI EFMs/DIT Industry Sector Teams IEFEs/DIT/ FCO in Post IEFEs/Posts keep sector teams and UKEF informed of opportunities Sector teams to identify UK supply chain for overseas projects 5 12 12

Track record in supplying range of transaction structures UKEF embedding and building-out the IEFE network globally in key regional hubs Further regions to be added during 2019/20

UKEF Transaction Road Map STEP 1 STEP 2 GATEWAY 1 STEP 3 GATEWAY 2 Enquiry received and initial check of information provided undertake Supply additional information from exporter / foreign buyer. For private sector this would include last three years audited financial accounts, for sovereign’s preliminary checks on budget allocation and priority if that is an IMF programme Submission to credit committee for expression of interest – this is valid for 6 months. Exporter submits application form for support on a particular product and due diligence commences Subject to Due Diligence credit guarantee issued and project commences once conditions precedent are satisfied ORIGINATION TEAM ORIGINATION TEAM ORIGINATION / UW TEAM UNDERWRITING TEAM UNDERWRITING TEAM ORIGINATION TEAM - REGIONAL CLIENT COVERAGE & REGIONAL TRANSACTION ASSISTANCE

Overseas buyer and their international projects UKEF supplier fairs Overseas buyer and their international projects Supplier fair hosted by UKEF and one-to-one procurement meetings UKEF provides financial support, and connects project sponsors with UK suppliers UK supply chain

UKEF’s recent experience in EPC/OEM support – CCGT (Iraq) Case study: GE/ENKA supplier fair 3 Event Event placed UK suppliers in front of the procurement teams from ENKA and GE 1 Opportunity 2 Recruitment 187 UK suppliers attended General Electric and ENKA looking for suppliers for the construction of the Dhi Qar & Samawa Combined Cycle Power Plant in Iraq. UKEF generates interest from 412 Oil and Gas companies, based on the set requirements from the Project Sponsor. 104 meetings 1-1 set up with the procurement teams $500m worth of UK supplies secured

UKEF Transaction Road Map Nov 2016 Tahrir Petrochemical Plant Egypt 137 suppliers 97 1-1 meetings 140 suppliers 187 delegates 104 1-1 meetings Mar 2017 General Electric & ENKA Turkey Sep 2017 Bechtel Several (inc. Kenya) 156 delegates 146 suppliers 88 delegates on roundtables 187 suppliers 235 delegates 114 1-1 meetings Nov 2017 DRPIC Duqm Oman Refinery 57 suppliers 73 delegates 86 1-1 meetings Jan 2018 GE Healthcare Africa and India November 201 85 suppliers 106 delegates 159 1-1 meetings Jun 2018 Bapco Modernisation Program Bahrain Oct 2018 VAMED Africa 85 suppliers 122 attendees 140 1-1 meetings

Climate Mitigation & Climate Adaptation

UKEF approach to climate change UKEF’s mission is to support UK exports - all sectors Environmental Social and Human Rights Risks are a core part of UKEF risks assessment and monitoring. OECD Common approaches and Equator Principles UKEF keen to support the transition to a lower carbon economy Insights into strength of UK supply chain in climate mitigation & adaptation being developed alongside stakeholders and industry itself

Case Study: Sustainable construction in UAE Support from UKEF helped UK firms Carillion and Zaha Hadid Architects secure contracts with UAE-based environmental management firm, Bee’ah, to design and build its headquarters. It will be first building of its kind in the emirate of Sharjah to be powered entirely by renewable and recoverable energy sources. UKEF provided an $80 million loan to support the UK firms’ contracts. “As pioneers in environmental sustainability in the Middle East, Bee’ah is proud of our international alliances and the partnerships we have forged to advance our ambitious strategic goals. This agreement is a significant moment in the history of the region.” HE Salim bin Mohamed Al Owais, Chairman, Bee’ah

UKEF approach to mitigation and adaptation UK renewables supply chain historically fragmented and availability of commercial finance UKEF working with DIT to develop our understanding and promote the UK renewable supply chain overseas (e.g. Offshore Wind) Adaptation / climate resilience: UK Export Finance can support growth of the UK’s climate change adaptation market, positioning UK supply solutions in this growing market whilst elevating the UKEF profile in the low carbon arena. UKEF is leading an initiative using the expertise of the UK Supply Chain to build climate resilience around the world - initial study by AECOM re Flood and Coastal Risk Management

Climate resilience initiative Initial study by AECOM to map the scale of the UK supply chain and priority markets in relation to the management of flood and coastal risks. Initial findings: The UK supply chain is diverse and could enable the UK to offer a one stop shop for Flood and Coastal Risk management goods and services. Markets have been identified including ones where UKEF and sister institutions (DFID, CDC & PIDG) have both existing relationships and mandates Next steps: continued engagement with Environment Agency and other key stakeholders, further work to be undertaken on current exports from UK FCRM community together with analysis on export readiness and value add.

Thank you www.gov.uk/uk-export-finance richard.simon-lewis@ukexportfinance.gov.uk