Regulatory environment for investors/banks

Regulatory environment for investors and banks 5th Annual Wind Energy in Hungary Workshop 1th October, 2013 Csobádi Ákos Head of Project Finance and Syndications Department Raiffeisen Bank Zrt.

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

1. 2. 3. 4. 5.

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Hungary’s rank on the renewable map and our ambitions Key questions for investors and banks Lending in Hungary Raiffeisen Bank in relation with renewable energy financing Summary

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

1. 2. 3. 4. 5.

Slide 3

Hungary’s rank on the renewable map and our ambitions Key questions for investors and banks Lending in Hungary Raiffeisen Bank in relation with renewable energy financing Summary

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks Renewable energy country attractiveness index, 08/2013.* Rank Country

Onshore wind

17 Poland

57,2

19 Italy

56,6

20 Spain

56,4

21 Austria

56,3

22 Portugal

56

23 Turkey

55,4

60,3

28 Romania

53,3

10 India

60,2

33 Czech

49

11 Denmark

59,8

12 Sweden

59,8

35 Bulgaria

48,2

13 Norway

58,9

36 Ukraine

46,1

14 Finland

57,8

15 Netherlands

57,5

37 Greece

45,6

16 Belgium

57,3

39 Slovenia

43,2

1 US

74,2

2 China

71,2

3 Germany

68,4

4 UK

66,2

5 Canada

64,2

6 Australia

63,2

7 Japan

60,3

8 France

60,3

9 Ireland

This index was introduced in 2003 and is the weighted average of several criterias including power offtake attractiveness, strength of natural resources, technology parameters, etc. Hungary had been ranked until 06/2012 (last ranking: 39th out of 40 countries), but was taken out, because of several reasons, including: cuts in government support and little progress in the recent years.

* source: Ernst & Young Slide 4

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Ambitions are/were there in Hungary, too!? N a tiona l renew a ble a ction pla n 2 0 1 0

800 700

MW

600 500 400 300 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Yea r

Source: http://ec.europa.eu/energy/renewables/action_plan_en.htm Slide 5

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

1. 2. 3. 4. 5.

Slide 6

Hungary’s rank on the renewable map and our ambitions Key questions for investors and banks Lending in Hungary Raiffeisen Bank in relation with renewable energy financing Summary

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Key questions for investors, basic factors 1. Location/wind OK

2. Electricity network capability OK The electricity network is capable of receiving a total of approximately 740 MWe of wind power. If network developments will result in an improvement in the controllability of the system, then the establishment of further capacities will be possible.

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Key questions for investors, regulations 3/a. Permits OK Permitting proccess could be shorter/less difficult, but generally ok. 3/b. Grid connection not OK Last valid tender for grid connection in 2006, hopefully new tender will come in the near future. 3/c. Feed-in tariffs not OK Waiting for the new regulations (METÁR), long-term (at least 10 years, but preferably more), above-market traiffs can result in postive NPV 3/d. Other regulations Managable i.a. variation from the planned output can be fined

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Other questions for banks Experienced sponsor with solid financial background

Subject to CF, Sponsor, but min. 20-30%, max. 50%, state subsidy is not equity, but not loan!

Sponsor Cash Flow Equity Collateral

Income: capacity * wind * tariff, tariff should be based on solid regulations and/or agreements for the whole tenor of the loan (10-15 years)! Costs: not the main question here

Mainly non-recourse, Pledge/call option on shares, assets (including land plot), receivables, contracts.

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

1. 2. 3. 4. 5.

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Hungary’s rank on the renewable map and our ambitions Key questions for investors and banks Corporate lending in Hungary Raiffeisen Bank in relation with renewable energy financing Summary

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Corporate lending in Hungary vs. other countries Bulgaria, Poland, Romania +10-17% Slovakia, Czech Republic, Euro zone -3-13% Baltic states, Hungary -25-27%

Sources: MNB, ECB, national banks Slide 11

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Conditions of restart of financing new windparks

Willingness of investors to invest in Hungarian energy sector Lower funding costs (incl. CDS of Hungary) and/or subsidized funding (see Funding for Growth and EIB frame) Stable regulations (incl. taxes), which can be relied on for long term

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

MNB Funding for Growth

Entitled deals: not restructured SMEs (max. EUR 50 mio Net Income or max. EUR 43 mio Total Assets and max. 250 FTEs) Interest margin: max. 2.50% p.a., fee: 0% Loan amount: HUF 3 mio. - 3 bio. Length of the tenor: max. 10 years Period of the program: 01.10.2013 – 31.12.2014

Slide 13

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

1. 2. 3. 4. 5.

Slide 14

Hungary’s rank on the renewable map and our ambitions Key questions for investors and banks Lending in Hungary Raiffeisen Bank in relation with renewable energy financing Summary

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Project Finance and Syndications : brief introduction Key activities:  Real-estate investment & development finance and leasing

 Leveraged finance  Acquisition finance  PPP & Project finance (including energy sector deals)

 Syndicated lending, club loans, collateral pools,  Lender of record transactions  Agency services for syndicated loans

Loan portfolio (drawn amount): c. HUF 230 bn FTEs: 20, incl. 4 FTEs for syndications

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Ákos Csobádi, 01.10.2013.

Regulatory for Department investors/banks Project Financeenvironment and Syndications

Project Finance, Syndications and Real Estate Leasing Strong track record

Our predecessor department called Project Finance & Syndications has been established in 1999, meaning that we have more than a decade long track record at the local market

Customer focus

From existence we have been building long-term customer relationships, resulting that we act as home-bank for most of our customers

In-depth industry expertise

Colleagues are specialized for a limited number of industries, thus can demonstrate in-depth knowledge and experience in those, as well as, Raiffeisen Banking Group owns SPVs executing equity investments on proprietary accounts in real estate and energy industry (developed 53 MW+ windparks in Hungary), which provide supplementary know-how for lending

Strong parent background

Raiffeisen Bank International AG, as parent, secures further enhancement to large-scale lending activity in form of regional expertise and extended underwriting capacity

Extended network

RBI Group operates an extensive network in CEE, SEE and CIS covering 17 countries, which reveals as major advantage for customers making business in this region

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

EIB frame via Raiffeisen Bank Purpose

Financing of energy efficency programmes and green energy investments in Hungary

Frame amount

EUR 50 mio

Currency

EUR/HUF

Hitelösszeg

Max. EUR 12.5 mio

Non-refundable EU subsidy

Max. 14% (max. EUR 140 th) of the loan amount

Final completion date

15th June, 2015

Total project cost

Max. EUR 25 mio

Project criteria:

Energy saving of 30% p.a. OR min. 20% decrease in output of gases strengthening the green-house effect

Tenor

Min. 4 years

Pricing

Tailor-made, but below standard market pricing

Slide 17

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

1. 2. 3. 4. 5.

Slide 18

Hungary’s rank on the renewable map and our ambitions Key questions for investors and banks Lending in Hungary Raiffeisen Bank in relation with renewable energy financing Summary

Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Summary

 Large scale ambitions (330MW => 750MW), but low output in recent years  Conditions of launching new projects are partly fulfilled, but tender for grid connections and stable long-term regulation are missing  Corporate lending in Hungary declined, but this trend can be reversed (see MNB Funding for Growth)  Raiffeisen Bank has special project finance team (and experience in wind park financing/development) and subsidised funds from EIB/MNB/MFB => want to be one of the first banks, which lends the new windparks in Hungary!

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Ákos Csobádi, 01.10.2013.

Regulatory environment for investors/banks

Questions now or later?

E-mail: [email protected]

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Raiffeisen Bank Zrt. Akadémia utca 6 1054 Budapest, Hungary Phone: +36 1 484 - 4529 Fax: +36 1 484 4444

Ákos Csobádi, 01.10.2013.

Regulatory for Department investors/banks Project Financeenvironment and Syndications Presentation - Raiffeisen Bank

Zrt.

Disclaimer This presentation has been prepared and provided with the exclusive purpose of prior illustration. The content of this presentation may in no event be deemed as an offer, provision of consultancy services, proposal, or recommendation, and must not be regarded as undertaking any obligation and/or assuming any liability of any nature by Raiffeisen Bank Zrt. Raiffeisen Bank Zrt. undertakes no liability for the accuracy, adequacy, and reliability of any data contained herein. This presentation is for illustrative purposes only, and Raiffeisen Bank Zrt. undertakes no liability for any consequences, losses, or damages arising from any use of the presentation or any contents thereof. This presentation may be copied, reproduced, conveyed or disclosed to any third party in whole or in part in any manner exclusively under the prior written consent of Raiffeisen Bank Zrt.

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Ákos Csobádi, 01.10.2013.