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Discover thought leadership and legal insights by our legal experts from across CMS. In our Expert Guides, written by CMS lawyers from across the jurisdictions where we operate, we provide you with in-depth legal research and insights that can be read both online and offline. You can also find Law-Now articles with focused legal analysis, commentary and insights to help you anticipate future challenges and much more.

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16 June 2021
CMS In­fra­struc­ture In­dex: Ac­cel­er­at­ing trans­form­a­tion
The in­fra­struc­ture mar­ket has re­mained re­si­li­ent in the face of COV­ID-19. The CMS In­fra­struc­ture In­dex has ranked 50 coun­tries by their at­tract­ive­ness for in­fra­struc­ture in­vest­ment and it paints a very pos­it­ive pic­ture. Singa­pore tops the lead­er board, bolstered by the un­veil­ing of its Green Plan 2030 which aims to ad­vance sus­tain­able de­vel­op­ment and re­duce the coun­try’s car­bon foot­print. There are big spend­ing plans in every re­gion as gov­ern­ments seek to close in­fra­struc­ture gaps, re­cov­er from the pan­dem­ic and stim­u­late their eco­nom­ies.   Please click through the re­port or down­load the pdf ver­sion at the bot­tom of this page.
15 June 2021
Belt and Road Ini­ti­at­ive
What does the fu­ture hold for the Belt and Road ini­ti­at­ive at a time of heightened geo­pol­it­ic­al ten­sions, as gov­ern­ments around the world try to deal with both the coronavir­us and cli­mate change?
15 June 2021
Fore­word: Ac­cel­er­at­ing trans­form­a­tion
The in­fra­struc­ture mar­ket has re­mained re­si­li­ent in the face of COV­ID-19, save the ob­vi­ous area of trans­port. Gov­ern­ment stim­u­lus pack­ages around the world prom­ise fur­ther activ­ity with the UK, US and EU, for ex­ample, out­lining am­bi­tious in­fra­struc­ture spend­ing pro­grammes.  As is of­ten the ques­tion, will these even­tu­ate? COV­ID-19 has also provided the back­drop for tough­er con­trols on for­eign in­vest­ment. The likes of the UK, France and Aus­tralia have either in­tro­duced laws for the first time or re­duced the thresholds for vot­ing rights or trans­ac­tion val­ues.  However, that is not the case for all mar­kets. Pri­or to the pan­dem­ic, pro­tec­tion­ism ap­peared to be de­clin­ing in the Middle East, CEE and APAC where the need for for­eign cap­it­al is great­er.  It is too early to tell what im­pact such reg­u­la­tions will have on cap­it­al flows in de­veloped mar­kets but on cur­rent trans­ac­tion levels, it ap­pears to be lim­ited. Nev­er­the­less, it is vi­tal that in­fra­struc­ture in­vestors are fully aware of the broad scope of the con­trols when con­sid­er­ing their in­vest­ment plans.There is sig­ni­fic­ant at­ten­tion on di­git­al in­fra­struc­ture and the pan­dem­ic demon­strated the need for in­vest­ment in a bal­anced range of tech­no­lo­gies. Cloud ser­vices and satel­lite con­nectiv­ity will in­crease to de­liv­er high speed in­ter­net any­where in the world. In­fra­struc­ture has al­ways played an im­port­ant role in ESG, and these con­sid­er­a­tions are now the rule, not the ex­cep­tion. Net Zero plays a big part in gov­ern­ment policy; dis­clos­ures are now man­dat­ory re­quire­ments and pro­jects that will re­duce car­bon emis­sions are be­ing sup­por­ted. In­vest­ment strategies are also be­ing shaped by stake­hold­ers as they start to voice their con­cerns, in­clud­ing by way of share­hold­er act­iv­ism and lit­ig­a­tion. The CMS 2021 In­fra­struc­ture In­dex has ranked 50 coun­tries by their at­tract­ive­ness for in­fra­struc­ture in­vest­ment and it paints a very pos­it­ive pic­ture. Singa­pore tops the lead­er board, bolstered by the un­veil­ing of its Green Plan 2030 which aims to ad­vance sus­tain­able de­vel­op­ment and re­duce the coun­try’s car­bon foot­print. There are big spend­ing plans in every re­gion as gov­ern­ments seek to close in­fra­struc­ture gaps, re­cov­er from the pan­dem­ic and stim­u­late their eco­nom­ies. In­fra­struc­ture mar­kets re­main buoy­ant and there is no sign of slow­ing down. Thank you to GIIA, who col­lab­or­ated with us through­out, our re­search part­ners Cap­it­al Eco­nom­ics and our in­ter­viewees for giv­ing up their valu­able time to share their views on the in­fra­struc­ture sec­tor in their re­spect­ive mar­kets.
14 June 2021
Cent­ral and East­ern Europe
An­oth­er new source of fin­ance is the Three Seas Ini­ti­at­ive In­vest­ment Fund, backed by vari­ous CEE na­tion­al de­vel­op­ment fin­ance in­sti­tu­tions. This made its first in­vest­ments in 2020, buy­ing a con­trolling in­terest in Green­ergy Data Cen­ters, a CEE data centre plat­form, and Cargounit, a key play­er in the CEE rail­way in­dustry. The fund is in­ten­ded to com­ple­ment and strengthen the cap­it­al de­ploy­ment of in­di­vidu­al Three Seas coun­tries and EU fin­an­cial in­stru­ments.Some CEE na­tions have also signed up to China’s Belt and Road Ini­ti­at­ive (BRI), al­though the amount of Chinese in­vest­ment that has oc­curred vari­ous sig­ni­fic­antly between coun­tries, with many re­gion­al BRI pro­jects be­ing in smal­ler non-EU states. Bol­ster­ing con­nectiv­ity There is sig­ni­fic­ant fo­cus on con­nectiv­ity – both phys­ic­al and tech­no­lo­gic­al – across CEE. Re­gion­al policy ob­ject­ives in­clude strength­en­ing EU in­teg­ra­tion by en­han­cing the se­cur­ity of in­fra­struc­ture sup­ply and con­trib­ut­ing to en­hanced in­ter­con­nectiv­ity between EU mem­ber states. The rail sec­tor in par­tic­u­lar has ini­ti­ated prom­in­ent cross-bor­der pro­jects, such as the mod­ern­isa­tion of the Bud­apest-Bel­grade line, and the con­struc­tion of a line between Katowice in Po­land and Os­trava in the Czech Re­pub­lic. Work also con­tin­ues on the Rail Balt­ica net­work, aimed at in­teg­rat­ing the Balt­ic States in­to the EU’s rail net­work.In con­trast, des­pite the re­gion’s good 4G cov­er­age and re­l­at­ively com­pet­it­ive fibre broad­band avail­ab­il­ity, 5G pen­et­ra­tion looks likely to be slow, with many pro­grammes hav­ing been dis­rup­ted by the pan­dem­ic. While the CEE di­git­al eco­nomy has been grow­ing strongly, without ad­di­tion­al in­vest­ment in in­fra­struc­ture its tech­no­lo­gic­al com­pet­it­ive­ness may be at risk – al­though key di­git­al lead­ers, such as Es­to­nia, are likely to re­tain their strong po­s­i­tions. En­ergy trans­form­a­tion gath­ers pace CEE coun­tries are mak­ing great strides in the en­ergy sec­tor. Mar­ket par­ti­cipants ex­pect to see a wave of EU back­ing for en­ergy trans­form­a­tion pro­jects. De­cent­ral­ised en­ergy sys­tems are driv­ing in­vest­ment in net­works, and cli­mate change tar­gets are spur­ring pro­gress in areas such as re­new­able en­ergy, waste-to-en­ergy in­fra­struc­ture and, in some coun­tries, nuc­le­ar new build.
14 June 2021
Middle East
For an­oth­er, Saudi Ar­a­bia’s giga-pro­jects provide a sub­stan­tial pipeline of work. The de­veloper of the 28,000 square kilo­metre Red Sea Pro­ject tour­ist re­sort awar­ded USD 4bn dol­lars of con­struc­tion con­tracts last year alone, while Neom, the smart-city pro­ject, is backed by USD 500bn of pub­lic funds. Al­though pro­jects such as Neom are the ob­vi­ous flag-bear­ers for di­git­al­isa­tion, Saudi Ar­a­bia is also con­tinu­ing to strengthen its di­git­al in­fra­struc­ture by de­ploy­ing 5G net­works and in­vest­ing in 6,500 new towers. Di­git­al leap-frog­gers More broadly, though, the emer­gence of nu­mer­ous am­bi­tious green­field pro­jects and a ready sup­ply of land for de­vel­op­ment in the re­gion, will al­low for di­git­al in­fra­struc­ture to be em­bed­ded in so­ci­ety by design and by de­fault, rather than ret­ro­fit­ted in­to age­ing pre-di­git­al in­fra­struc­ture. Coun­tries are mak­ing the move to build on in­ter­na­tion­al best prac­tice and lever­age op­por­tun­it­ies to trans­form, such as with the UAE’s Smart Dubai 2021 pro­ject. In­vest­ment in lo­gist­ics and trans­port is also ex­pec­ted across the re­gion (see our case study) as well as in re­new­able en­ergy and agri-tech. Di­git­al tech­no­lo­gies will be at the heart of all these de­vel­op­ments.The oil and gas sec­tor will re­main a sub­stan­tial part of the Gulf eco­nomy for many years yet and will con­tin­ue to of­fer in­vest­ment op­por­tun­it­ies. However, the trans­ition to­wards re­new­ables is also hap­pen­ing with­in the re­gion. Saudi Ar­a­bia, which has some of the low­est cost sol­ar schemes in the world, aims to gen­er­ate half its elec­tri­city from gas and re­new­ables by 2030. Ease of do­ing busi­ness lim­its re­gion’s rank­ings While in­vest­ment op­por­tun­it­ies in the re­gion abound, the busi­ness en­vir­on­ment can be chal­len­ging. The ten­der­ing pro­cess can be pro­trac­ted in Kuwait, while a dip­lo­mat­ic three-and-a-half-year fal­lout between Qatar and its neigh­bours that res­ul­ted in sanc­tions and bor­der clos­ures only came to an end at the start of 2021. Pro­tec­tion­ism is a factor to con­sider in Saudi Ar­a­bia, with en­tit­ies wish­ing to work with the gov­ern­ment re­quired to be based in the coun­try. And, as part of the King­dom’s ‘Saudi-isa­tion’ policy, pro­ject bids must spe­cify what ele­ment of em­ploy­ment gen­er­ated will be for loc­al people. Is­sues around the ease with which in­vest­ment in the re­gion can be con­duc­ted are not new and are ac­cep­ted by many as part of the busi­ness en­vir­on­ment. However, without them the re­gion would score more highly in our rank­ings.
14 June 2021
West­ern Europe
The EU has set leg­ally bind­ing tar­gets for a bloc-wide goal of Net Zero green­house gas emis­sions by 2050 and a min­im­um 55% cut in emis­sions by 2030 (com­pared with 1990 levels). The pro­gramme in­cludes in­cent­ives to en­cour­age private sec­tor in­vest­ment and is aimed at eco­nom­ic growth and in­creas­ing jobs and prosper­ity. With tar­gets for emis­sions re­duc­tions now leg­ally bind­ing, West­ern European coun­tries with­in the EU have a mam­moth task ahead. Strong ac­tion is ne­ces­sary if the Par­is cli­mate agree­ment goals are to be met.Cent­ral banks in the re­gion have joined in ef­forts to ad­dress cli­mate change, and to con­sider ESG con­sid­er­a­tions as part of their man­dates. The Bank of Eng­land re­cently an­nounced that it will no longer buy bonds is­sued by highly pol­lut­ing com­pan­ies, while the European Cent­ral Bank and Riks­bank have pledged to buy more green bonds as part of their as­set pur­chase pro­grammes.Ful­filling these green policy ini­ti­at­ives will be no easy task. In or­der to see these tar­gets through, gov­ern­ments in the re­gion will need to be flex­ible with how they fund these am­bi­tions. While the role of state fund­ing has in­creased in re­sponse to the pan­dem­ic, many gov­ern­ments across West­ern Europe face huge de­fi­cits. Suc­cess­ful part­ner­ships with the private sec­tor will be cru­cial to make crit­ic­al in­fra­struc­ture pro­jects more eco­nom­ic­ally sus­tain­able and vi­able.While chal­lenges ex­ist, coun­tries across the re­gion con­tin­ue to break bound­ar­ies in in­nov­a­tion. The Neth­er­lands has had a fo­cus on float­ing photo­vol­ta­ic pro­jects, with two float­ing sol­ar parks re­cently com­pleted in the coun­try with a ca­pa­city of 29.2 MW. Aus­tria has a num­ber of ex­amples of in­nov­at­ive pro­jects in the pipeline – glass fibre pro­jects are look­ing for private equity in­vestors, a EUR 25m re­new­ables in­vest­ment in the con­struc­tion of Aus­tria’s largest elec­tro­lys­is plant, a EUR 30m in­vest­ment for pro­duc­tion of second-gen­er­a­tion bio­fuels and  OMV and Aus­tri­an Post have star­ted to build in­fra­struc­ture for hy­dro­gen busses. Pan­dem­ic re­in­forces need for re­li­able di­git­al in­fra­struc­ture The pan­dem­ic has un­der­lined the need for fast and re­li­able in­ter­net con­nec­tions at home. West­ern Europe’s broad­band in­fra­struc­ture has coped re­l­at­ively well in re­sponse to in­creased us­age dur­ing the height of lock­downs, but poli­cy­makers have ac­know­ledged that great­er in­vest­ment is needed to en­sure the re­si­li­ence of fibre-to-the home (FTTH) in­fra­struc­ture. A num­ber of coun­tries in the re­gion, in­clud­ing Aus­tria, Bel­gi­um, the Neth­er­lands, France and the United King­dom, have an­nounced plans for large-scale FTTH pro­jects over the last year, with fund­ing from these na­tions alone totalling over USD 10bn.  Sup­ply is­sues lead to pro­tec­tion­ism The pan­dem­ic has also high­lighted the vul­ner­ab­il­ity of key sec­tors of eco­nom­ies. With bor­ders clos­ing, na­tion­al man­u­fac­tur­ing sup­ply chains was chal­lenged. Sup­ply short­ages dur­ing the height of the pan­dem­ic, par­tic­u­larly of med­ic­al products, have led poli­cy­makers in Europe to con­sider op­tions for reshor­ing pro­duc­tion back to its mem­ber states, and to as­sess vul­ner­ab­il­it­ies in stra­tegic sec­tors that might later be filled by an act­ive in­dus­tri­al policy. However, much of these ini­tial ex­pect­a­tions of a shift in sup­ply chains have since been down­graded.   While there is much to be pos­it­ive about in the re­gion, there is also a note of cau­tion. The EU’s For­eign Dir­ect In­vest­ment (FDI) screen­ing mech­an­ism, which be­came fully op­er­a­tion­al in Oc­to­ber 2020, al­lows for FDI in sens­it­ive in­dus­tries to be scru­tin­ised to avoid the loss of crit­ic­al as­sets and tech­no­logy. A num­ber of coun­tries in West­ern Europe have made changes to their FDI rules in a bid to pro­tect stra­tegic­ally im­port­ant in­dus­tries in­clud­ing in­fra­struc­ture, tech­no­logy, raw ma­ter­i­als and health. For ex­ample, Ger­many has re­cently amended its FDI screen­ing rules, bring­ing parts of the health care sec­tor un­der the re­gime ap­plic­able to crit­ic­al in­fra­struc­ture. France, Spain and Italy have also re­cently ex­pan­ded their FDI re­gimes. It is un­clear if these in­creased con­trols will im­pact in­vest­ment in the re­gion, but heightened scru­tiny of deals and closer co­ordin­a­tion of na­tion­al gov­ern­ments are likely to en­sue.
14 June 2021
High­lights of in­ter­na­tion­al in­vest­ment op­por­tun­it­ies
The in­ter­act­ive map be­low shows some high­lights of the in­ter­na­tion­al op­por­tun­it­ies for in­fra­struc­ture in­vestors. Simply click on each re­gion to find out more.The full re­port and re­gion­al over­views con­tain a more de­tailed coun­try-by-coun­try ana­lys­is of all 50 jur­is­dic­tions.
14 June 2021
En­ergy Trans­ition: The evolving role of oil & gas com­pan­ies in a net-zero...
After an ex­traordin­ary year of health and eco­nom­ic chal­lenges, the glob­al oil and gas sec­tor has an es­sen­tial role to play in the eco­nom­ic re­cov­ery. The same could how­ever be said of any eco­nom­ic re­cov­ery and ex­pan­sion over the past 100 years – dur­ing this time oil and gas com­pan­ies have provided most of the primary en­ergy that has fuelled huge eco­nom­ic growth. But this time does look dif­fer­ent. The oil and gas sec­tor will power eco­nom­ic re­cov­ery not just through oil and gas ex­plor­a­tion and pro­duc­tion, but also (and per­haps counter-in­tu­it­ively to some) through fa­cil­it­at­ing the trans­ition to a lower-car­bon eco­nomy and even­tu­ally a net zero fu­ture. This re­port presents a wide-ran­ging re­view of the role of oil and gas com­pan­ies in that fu­ture.
10 June 2021
In Chile, eco­nom­ic re­cov­ery plans un­veiled by Pres­id­ent Se­bastián Piñera ear­mark USD 8bn for in­fra­struc­ture, in­clud­ing funds for work on roads, wa­ter in­fra­struc­ture, ports and air­ports. The gov­ern­ment also plans to speed up its con­ces­sions to push for­ward pro­jects that have already been ap­proved. Sim­il­arly, Mex­ic­an pres­id­ent An­drés Manuel López Obrador re­af­firmed his com­mit­ment to in­fra­struc­ture spend­ing by un­veil­ing a second in­fra­struc­ture in­vest­ment plan in Novem­ber 2020, worth ap­prox­im­ately USD 11.4bn. The plan in­cludes 29 pro­jects to be de­veloped in the com­mu­nic­a­tions, trans­port­a­tion, en­ergy, wa­ter and en­vir­on­ment sec­tors. There is an aim to fin­ance pub­lic in­fra­struc­ture pro­jects in which the private con­tri­bu­tion shall be at least 50% of the re­quired in­vest­ment.In­vest­ment in so­cial in­fra­struc­ture, par­tic­u­larly hos­pit­als, has been giv­en par­tic­u­lar ur­gency. P3 so­cial in­fra­struc­ture mod­els are well-es­tab­lished in the re­gion and they will likely play a great­er role in the years ahead giv­en that the pan­dem­ic has high­lighted the crit­ic­al im­port­ance of ac­cess­ible health care fa­cil­it­ies. Satel­lite tech­no­lo­gies to help close in­ter­net con­nectiv­ity gap The Amer­icas are push­ing the bound­ar­ies with in­nov­a­tions in di­git­al­isa­tion. Di­git­al con­nectiv­ity re­mains a chal­lenge in Lat­in Amer­ica in par­tic­u­lar. While con­sid­er­able in­vest­ment has been made over the years to im­prove the re­gion’s di­git­al in­fra­struc­ture, only around 50% of house­holds cur­rently have ac­cess to broad­band. Much of the in­vest­ment fo­cus so far has been on fibre to the premises and 5G.While some coun­tries are mak­ing great strides (Chile com­pleted the first 5G spec­trum tender in Lat­in Amer­ica earli­er this year), oth­ers that have great­er in­come in­equal­ity and large rur­al areas are hav­ing more dif­fi­culty catch­ing up. A pro­posed solu­tion in ad­dress­ing the di­git­al di­vide is the de­vel­op­ment of satel­lite tech­no­logy. With tri­als cur­rently on the go in the US and Canada, the Starlink pro­ject – a US-based satel­lite broad­band ser­vice – aims to bring satel­lite in­ter­net to Lat­in Amer­ica. Starlink has be­gun pro­ced­ures to op­er­ate in Mex­ico, Colom­bia, Chile, Ar­gen­tina, and Brazil. Oth­er coun­tries in the re­gion are also look­ing to space to help ad­dress the lack of di­git­al cov­er­age in more isol­ated areas, via the cre­ation of na­tion­al and re­gion­al space agen­cies. En­ergy trans­ition con­tin­ues to be a pri­or­ity Coun­tries across North, Cent­ral and South Amer­ica are also con­tinu­ing the push to the trans­ition away from fossil fuels to­wards clean­er en­er­gies. There has been a huge drive with­in the re­gion’s min­ing in­dustry to­wards em­bra­cing re­new­able en­ergy pro­cure­ment. Lead­ing green hy­dro­gen de­velopers are work­ing with Chile’s cop­per min­ing in­dustry to de­car­bon­ise heavy trans­port and in­tro­duce green am­mo­nia for man­u­fac­tur­ing min­ing ex­plos­ives. Large min­ing com­pan­ies are also em­bra­cing the use of sol­ar en­ergy to meet the de­mand of its high en­ergy-in­tens­ive pro­cesses.
10 June 2021
Asia Pa­cific
The last two years has seen un­pre­ced­en­ted activ­ity in the up­take of sol­ar and wind pro­jects, with Vi­et­nam emer­ging as a re­gion­al re­new­ables power­house with­in the South East Asia re­gion. Fa­vour­able tar­iff policies and tax in­cent­ives to en­cour­age in­vest­ment coupled with a nat­ur­al en­dow­ment of sol­ar power had driv­en Vi­et­nam to sur­pass Malay­sia and Thai­l­and to reach the largest in­stalled ca­pa­city of sol­ar pan­els in South­east Asia. Mak­ing cit­ies smarter A grow­ing num­ber of smart city pro­jects are de­vel­op­ing in the re­gion. Con­struc­tion of a new cap­it­al city from the ground up in In­done­sia, Nagara Rimba Nusa, is set to com­mence this year. The Ja­pan­ese gov­ern­ment an­nounced plans at the end of 2020 to provide USD 2.4bn of fund­ing to Ja­pan­ese com­pan­ies to de­vel­op smart city pro­jects in 26 cit­ies across South­east Asia. The Gov­ern­ment of In­dia has pledged to cre­ate 100 new Smart Cit­ies in the coun­try. And China cur­rently has roughly 800 smart city pi­lot pro­grammes un­der way, which is more than half of the world total. Open for busi­ness While many coun­tries across the re­gion have his­tor­ic­ally had re­l­at­ively strin­gent FDI rules sur­round­ing for­eign own­er­ship, par­tic­u­larly re­gard­ing in­fra­struc­ture sec­tors of stra­tegic im­port­ance, many na­tions have be­gun to loosen their stance. Gov­ern­ments across the re­gion have re­cog­nised the need to bring in new policies to lower bar­ri­ers to entry, par­tic­u­larly in the en­ergy sec­tor, and to en­cour­age great­er private sec­tor par­ti­cip­a­tion in pro­jects. Coun­tries in­clud­ing the Phil­ip­pines, Malay­sia, In­done­sia and Vi­et­nam are all slowly un­wind­ing FDI rules and stream­lin­ing pro­cesses to make in­vest­ment in in­fra­struc­ture more at­tract­ive to for­eign in­vestors.Not all gov­ern­ments are mov­ing at the same speed, or the same dir­ec­tion. Aus­tralia re­cently an­nounced changes to its FDI law, mean­ing for­eign in­vestors will face great­er scru­tiny when bid­ding for sens­it­ive as­sets.Ja­pan­ese and Korean in­vestors will con­tin­ue to play a large role in in­fra­struc­ture in­vest­ment in the Phil­ip­pines, Singa­pore and Vi­et­nam, where they have been act­ive in the past. China, mean­while, fur­thers its in­flu­ence in the re­gion through its Belt and Road Ini­ti­at­ive (BRI) pro­jects. With a re­newed fo­cus on di­git­al and green­er pro­jects, Chinese in­vest­ment through the BRI will be crit­ic­al in help­ing the APAC re­gion over­come its in­fra­struc­ture gaps.
10 June 2021
Mar­ket per­spect­ive: Dori­an Reece, De­loitte
Through his role as De­loitte’s Glob­al Head of Air­ports, Dori­an Reece has seen first-hand the im­pact the COV­ID-19 pan­dem­ic has taken on in­fra­struc­ture de­vel­op­ment.However, Reece ex­plains that while ad­vis­ory spend ground to a halt (spe­cific­ally re­lated to air­ports), the pan­dem­ic has not res­ul­ted in the dooms­day scen­ario for air­ports that many com­ment­at­ors an­ti­cip­ated early on. Gov­ern­ment-backed air­ports re­ceived ne­ces­sary sup­port to keep op­er­a­tions afloat. Not­ably, many in­fra­struc­ture funds with air­port hold­ings were highly di­ver­si­fied which has helped them man­age risk. “In­fra­struc­ture as a whole has held up re­l­at­ively well this last year,” says Reece. “So those funds hold­ing a di­ver­si­fied port­fo­lio of in­fra­struc­ture as­sets have been able to smooth out the de­cline and get through the crisis.”The avi­ation sec­tor in the Middle East fur­ther be­ne­fits in this re­spect due to in some coun­tries com­mon own­er­ship across com­pon­ents of the in­dustry cluster. Reece com­ments, “You see a much more co­ordin­ated ap­proach in ad­dress­ing in­dustry chal­lenges in the Middle East. It is in the gov­ern­ments’ in­terests to sup­port the sec­tor as a whole to find solu­tions and work to­geth­er through these types of chal­lenges.”As a Part­ner in De­loitte’s Gov­ern­ment and In­fra­struc­ture team in Dubai, Reece and the team sup­port gov­ern­ments across the in­fra­struc­ture life cycle from strategy, op­tions ana­lys­is, feas­ib­il­ity and ul­ti­mately bring­ing in­fra­struc­ture trans­ac­tions to mar­ket as well as sup­port­ing the private sec­tor bid­der side.Reece sees the in­fra­struc­ture mar­ket in the Middle East matur­ing rap­idly. He ac­know­ledges that gov­ern­ments in the re­gion view in­fra­struc­ture as a key re­quire­ment not only to en­able post-COV­ID re­cov­er­ies, but also to di­ver­si­fy their eco­nom­ies away from hy­dro­car­bon rev­en­ues to more pro­duct­ive sec­tors.Ac­cord­ing to Reece, the biggest mar­ket in the re­gion, Saudi Ar­a­bia, is at the fore­front of in­fra­struc­ture spend with es­tab­lished na­tion­al pro­grammes tar­get­ing FDI and in­creased private sec­tor par­ti­cip­a­tion. The King­dom’s ad­van­cing in­fra­struc­ture privat­isa­tion pro­gramme has re­cently ad­op­ted a new PPP law and has es­tab­lished the Na­tion­al Centre of Privat­isa­tion which is sup­port­ing gov­ern­ment en­tit­ies to en­gage with the private sec­tor. This will help bring trans­ac­tions to mar­ket, en­sur­ing they align with the King­dom’s stra­tegic ob­ject­ives and are ap­peal­ing to the private sec­tor. Par­tic­u­larly, there are large scale re­quire­ments across power, trans­port and so­cial in­fra­struc­ture.Reece be­lieves that a core ele­ment of the in­ward in­vest­ment that Saudi Ar­a­bia is seek­ing to at­tract through privat­isa­tion is not just for the sale or fund­ing of as­sets – he notes that the King­dom has a low cost of fin­an­cing. It’s more about bring­ing in cap­ab­il­it­ies and ef­fi­cien­cies to de­liv­er best-in class ser­vices. “What they are really look­ing to do,” Reece says, “is bring in­bound skills so that ser­vice stand­ards in­crease and the over­all cost to ser­vice these as­sets is re­duced.”One way in which this skill trans­fer can be ac­com­plished is through the de­vel­op­ment of joint ven­tures, of which Reece sees a grow­ing in­terest in the re­gion. While joint ven­tures of­ten re­quire more ef­fort in un­der­stand­ing risk al­loc­a­tion across re­spect­ive parties com­pared to the more com­mon PPP mod­els, Reece be­lieves that part of the ap­peal lies in the closer work­ing re­la­tion­ships between en­tit­ies. “The abil­ity to loc­ally cre­ate and own for the fu­ture is part of what the re­gion has learned from the mis­steps of his­tor­ic PPP pro­grams. If parties are able to es­tab­lish a mod­el that en­ables know­ledge trans­fer and loc­al con­tent and in­nov­at­ive solu­tions de­vel­op­ment, this will res­ult in a longer last­ing pos­it­ive im­pact to these coun­tries.”
10 June 2021
Mar­ket per­spect­ive: Chris­ti­an Roy, Am­ber In­fra­struc­ture Ltd
Am­ber In­fra­struc­ture is a spe­cial­ist in­fra­struc­ture in­vest­ment man­ager with 11 of­fices glob­ally and c.GBP 9bn of as­sets man­aged, in­clud­ing over 50 pro­jects taken through con­struc­tion in­to suc­cess­ful op­er­a­tion.Am­ber was ap­poin­ted as the ex­clus­ive in­vest­ment ad­viser to the Three Seas Ini­ti­at­ive In­vest­ment Fund (3SIIF) in early 2020. The 3SIIF, es­tab­lished in 2019, is a ded­ic­ated com­mer­cial fund tar­get­ing a pipeline of in­vest­ments in 12 European Uni­on CEE mem­ber states loc­ated between the Balt­ic, Black and Ad­ri­at­ic Seas.A key pri­or­ity of the 3SIIF is to ad­dress con­nectiv­ity is­sues with­in CEE coun­tries. Re­flect­ing on this mat­ter, Chris­ti­an Roy, an In­vest­ment Dir­ect­or at Am­ber In­fra­struc­ture, says, “From a his­tor­ic­al per­spect­ive, the col­lapse of the East­ern Bloc in 1989 was fol­lowed by the de­vel­op­ment of East-West net­works that served in­teg­ra­tion ef­forts and the cre­ation of new sup­ply chains with West­ern Europe. However, the North-South routes re­mained largely un­der­in­ves­ted, des­pite the eco­nom­ic need for the cre­ation of such in­fra­struc­ture.”Pro­jects are well un­der­way. The Fund’s first in­vest­ment in Oc­to­ber 2020 was the ac­quis­i­tion of ‘Cargounit’, the largest in­de­pend­ent lo­co­mot­ive leas­ing com­pany in Po­land. The Pol­ish rail freight mar­ket is the second largest in Europe, after Ger­many, and Roy ex­pects the mar­ket to con­tin­ue to grow, with a large-scale mod­ern­isa­tion pro­gramme un­der­way pro­mot­ing con­nectiv­ity both in Po­land and with­in the wider CEE re­gion.The 3SIIF also made its first di­git­al in­vest­ment in Novem­ber 2020, ac­quir­ing a con­trolling in­terest in ‘Green­ergy Data Cen­ters’, a CEE data centre plat­form. The first centre will be de­veloped in Es­to­nia and is ex­pec­ted to be the largest of its kind in the Balt­ic re­gion with up to 20MW of ca­pa­city upon com­ple­tion.The avail­ab­il­ity of struc­tur­al funds from the EU is an­ti­cip­ated to di­min­ish in the long-term as the CEE re­gion be­comes more pros­per­ous. Yet Roy be­lieves the pro­spects for in­fra­struc­ture in­vest­ment across the CEE re­gion are bright. “The EU mem­ber states of the CEE form one of the fast­est grow­ing re­gions in the de­veloped world, of­fer­ing the at­tract­ive com­bin­a­tion of com­par­at­ively high GDP growth with strong in­dic­at­ors of re­gion­al sta­bil­ity. In­fra­struc­ture in­vest­ment needs have been es­tim­ated at more than EUR 500bn to 2030. This sug­gests a sig­ni­fic­ant op­por­tun­ity for in­fra­struc­ture in­vest­ment both from pub­lic and private cap­it­al."“The gap cre­ated by the re­duc­tion in fund­ing from the EU will provide room for private sec­tor in­vestors to take ad­vant­age of in­vest­ment op­por­tun­it­ies due to strong de­mand for in­vest­ments in­to in­fra­struc­ture. In turn, this is ex­pec­ted to build a com­pel­ling in­vest­ment case for in­sti­tu­tion­al in­vestors seek­ing long-dated, se­cure and di­ver­si­fied re­turns in one of Europe’s most prom­ising geo­graph­ies.”