1. Introduction to DBFM & the bank’s point of view 9 December 2014

2. 2 Financing PPP Projects a PPP is a global offer : Global contract between a public entity and a private partner to : Design, Build, Finance, (Maintain or Operate), an asset In order to provide a service to the public (sector) In return for an ongoing fee based on availability or demand Concept of PPP

3. 3 Financing PPP Projects DBFM - PPP Financing of infrastructure assets (highways, prisons, schools, …) Client = Private Equity Fund / Contractors via SPV Type of financing: LT loan, with sculpted repayment profile Risks  Construction risk, including cost overruns, late delivery …  Availability risk, including maintenance risks  Credit risk on the granting authority which pays the quarterly availability payments

4. 4 Financing PPP Projects Main Characteristics of Contractual PPP Dividends / Interests Special Purpose Vehicle Maintenor Builder & Operator (+ external investors) Builder Equity / Subdebt Fixed Remuneration Maintenance (& operation) Sculpted debt servicing LT loan Lenders Construction Lump sum Maintenance contract Design Build contract Payment (PFI case) Payment (Concession case) Either LT availability payment (PFI) or Right to collect from users (Concession) DBFM of Infrastructure Subcontractors DBFM contract Public authority Tax payer User

5. 5 Financing PPP Projects A few examples Project R4 - GhentPrison Beveren

6. 6 Financing PPP Projects Convergence of 3 expertises : Authority, Industrial Partners, Financial Partners Political Support ☐ Strong political willingness ☐ Stable and straightforward legal, regulatory & permitting framework ☐ Reasonable size and tenor of the project Know-how ☐ Proven technology ☐ Each partner has specialized dedicated know-how in PPP structuring ☐ Additional ad hoc external competences (with clear mission) ☐ Team work even within each partner organization Allocation of Tasks and Risks ☐ allocation of the risk(s) to the party who is most suited to manage it Conditions of success for DBFM PPP

7. 7 Financing PPP Projects Simplified risks matrix for DBFM PPP Public sectorPrivate sector Limited list of risks including : Definition of project specifications Vandalism (Delay in) obtaining permits or permit withdrawalIntroduction of Permit Change in law Unknown archeology or obstacles Loss of ESR 95 neutrality Non insurable risks Force Majeure Change order All risks unless specifically excluded => Design & Build (incl. cost overrun, weather, delay...) Maintain (incl. inflation mismatch, obsolescence,...) Financing (incl. interest rate evolution, refinancing,…)

8. 8 Financing PPP Projects Motivations of the Financial Private Partner Achieving « Value for Money » A valuable Asset Class

9. 9 Financing PPP Projects Drawbacks of PPP = Unavoidable Fixed Costs … Pleads for a minimum size but still within a well defined scope of work Public Partner □Auctioning and structuring costs □No budgetary flexibility any more □Time consuming Private Partner □ Bidding costs (external advisors needed for legal, financial, technical, environmental, accounting & tax aspects) □Potential sunk costs if not preferred bidder □Time consuming

10. 10 Belfius Bank A very experienced team … NameContractProcurement authorityContent BraboDBFMDe Lijn / AWV / BAM NV tram line +depot NautinvestBareboat charterVl Gewestpilot vessels Flemish schoolsDBFMVl GewestSchools Bus depots cluster 1DBFMDe LijnBus depot Eupen schoolsDBFMEupen + German CommunitySchools Prison BeverenDBFMRégie des BâtimentsPrison Prison DendermondeDBFMRégie des BâtimentsPrison Via R4 GentDBM+FVia Invest (Vl Gewest)Ring Gent LivanDBFMDe Lijn Tram line + tunnel

11. 11 Belfius Bank … at your disposal Dominique de Wilde d’Estmael François Greindl Thomas Verdcourt Koen Wuyts Eric Vleminckx Contact details