Asli Erden Ozturk Principal Banker EBRD Investing in Turkey and the Growing Economy Half-day MEA Conference Wednesday 18th March 2015

1. Aslı Erden Öztürk
Principal Banker
EBRD
Project Financing for
Infrastructure/PPP Projects in Turkey
Investing in Turkey and the Growing Economy
London, 18 March 2015
© European Bank for Reconstruction and Development 2014 | www.ebrd.com

2. AAA/Aaa rated multilateral development
bank, promotes transition to market
economies in 35 countries from central
Europe to central Asia and the Southern
and Eastern Mediterranean – SEMED
region)
In 2014, the EBRD welcomed Cyprus and
Libya as a recipient country and member
respectively.
• Owned by 65* countries and two inter-
governmental institutions.
• Capital base of €30 billion.
• Invested over €95 billion in more than
4,000 projects since 1991
*Libya is yet to become a fully ratified member of the EBRD
• Results in 2014:
• €8.85 billion invested in 377 projects
• Private sector accounted for 70% share
The EBRD snapshot
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Cumulative business volume of €95bn

3.  The EBRD has been investing in
Turkey since 2009 and today, in
terms of annual business volume,
Turkey has become the largest
country of EBRD operations.
 In 2014 the EBRD invested more
than € 1.5 billion for 40+ projects in
Turkey.
 As of today, total number of
projects reached 136 with a
portfolio more than € 4billion.
 In the resident offices in Istanbul,
Ankara and Gaziantep EBRD
employs 35 professional bankers.
EBRD in Turkey
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4.  Our operational priorities in Turkey:
 developing sustainable energy (including support to on-going
reforms of the energy sector through policy dialogue);
 promoting the development of micro, small and medium
enterprises (MSMEs);
 enhancing the competitiveness of Turkish industry;
 promoting market approaches toward investment in infrastructure;
 support the Turkish government’s privatisation programme in the
enterprise and financial institutions sector.
Operational Priorities in Turkey
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5. How we deliver results ?
Development of
strong institutional
and regulatory
frameworks
Donor funded
technical
cooperation to
overcome barriers
and facilitate
implementation
Projects &
Investments
Policy
Dialogue
Technical
Cooperation
Wide range of
financing instruments
for public and private
clients
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6.  Strong, internationally recognized partner
 Higher risk appetite than other lenders
 Long established policy dialogue with Government and
Regulators
 Unparalleled presence in the region provides mitigation of
political and regulatory risks.
 Preferred creditor status in all countries of operations.
 Catalysts to access additional finance
 Flexible deal structures and products
 Dedicated team with expertise in a variety of sectors and
countries
 Donor-funded technical assistance to develop projects
EBRD’s Value-Added: a unique offering
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7. Wide experience in PPP structures
 Assistance to public/authorities:
 Provide general advice on acceptable process.
 EBRD Policy for Concessions.
 Facilitate grant funded technical assistance.
 Development of regulatory structures/PPP framework.
 Help in preparation of the competitive tendering, projects.
 Structuring the financing:
 Debt
 Equity
 Commercial loan co-financing
 Environmental, social, health and safety improvement of projects.
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8. Extensive offer of tailored financial products
Debt Equity
 Loans to the private sector (up to 35%
syndicating the rest), including SME
 Sovereign, sovereign guaranteed and
loans to state owned companies
 Debt co-financing, working with
commercial banks and IFIs
 Project finance loans (incl. PPP)
 Hard/local currency. Fixed/floating rates
 Syndication under preferred creditor status
 Access to capital markets
 Investing with majority sponsor to
reduce equity burden and add
partnership value. Typically 20-25%
 Common or preferred stock
 Privatization and initial public offering
(IPO)
 Mezzanine equity and subordinated
debt
 Infrastructure funds
 PPP
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9. EBRD-participated PPP Projects in Infrastructure in
Turkey
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PPP Loan Loan EBRD Tenor
Year Project Type Type Amount (m) Amount (m)
2014 Adana Hospital PPP DBFMO Senior Loan € 440 € 115 18 year
B-Loan cover € 100
2014 Dalaman Airport TOR Senior Loan € 175 € 87.3 16 year
2013 Mersin International Port TOR Project Bond $450 $80 7 year
2013 Asyaport Greenfield, Senior Loan $267 $92 10 year
concession on land
2012 TAV Izmir Airport TOR Senior Loan € 250 € 70 15 year
B-Loan cover € 75 15 year
2012 Eurasia Tunnel BOT Senior Loan $960 $150 18 year
2011 Privatisation of IDO Share sale, Senior Loan $650 $150 12 year
TOR on lines and piers
2010 TASK- Dilovasi Waste Water BOT Senior Loan € 13.5 € 13.5 10 year
2010 TASK- Gulluk Water BOT Senior Loan € 2.5 € 2.5 10 year
€ 2,940 € 881Total (million €)

10. EBRD-participated other Infrastructure Projects in Turkey
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Arkas, Senior Corporate Loan, EUR 21.4 million, 2010;
Bursa Light Rail, Municipal Loan, EUR 70 million, 2011;
Bodrum Water, Municipal Loan, EUR 7.5 million, 2011;
Gaziantep CNG Buses, Municipal Loan ,EUR 10 million,
2011;
Mersin Wastewater, Municipal Loan, EUR 20 million, 2012;
ER Denizcilik, Senior Corporate Loan, USD 39.3 million,
2012;
 Izmir Ferries, Municipal Loan, EUR 33 million, 2013;

11. Republic of Turkey - Plans for Infrastructure
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EUR 200 – 400 bn in infrastructure investments over the next 10 years;
Examples of infrastructure requirements:
•EUR 12 billion hospital facilities PPP programme: up to 30 projects
tendered in 2 Phases; Phase 1 including 16 hospitals and EUR 6 billion
investment already awarded
•USD 11 billion rail network expansion over next 3 years and USD 45
billion by 2023
•Extension of dual carriageways to 36,000 km by 2023 ( 22,000km in
2012) (Expected cost of USD 80billion)
•USD 6 billion highway to Izmir; Izmit Bay Crossing

12. Turkey’s Plans for Infrastructure- Con’t
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• Istanbul airport.
• High speed train Istanbul to Ankara
• North Marmara Highway
• PLUS: urban regeneration plan

13. Hospital Facilities Management PPP projects
currently mandated
The EBRD Board has pre-approved a financing framework of
Euro 600m for Turkey’s Hospital Facilities Management PPP programme.
• Adana Hospital PPP - signed in 2014
• Etlik Hospital PPP
• Gaziantep Hospital PPP
• Konya Hospital PPP
• Elazig Hospital PPP
• Izmir Hospital PPP
• Kocaeli Hospital PPP
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14. Hospital Facilities Management PPP project
example-Ankara Etlik Hospital PPP
• Intended to service central Anatolia’s 12 million
• Project costs EUR 1.1 billion
• DBFLT 28.5 year concession
• 3,566 beds
• Construction, provision of medical equipment, maintenance for the facilities
• NO medical service provision
• Availability Payment from the Ministry of Health (fixed, linked to CPI and FX)
• Service Payment from the Ministry of Health (minimum guarantee; market testing
every 5 years)
• Compensation on Termination by Ministry of Health
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15. Financing of Turkish Hospital PPPs
 EBRD debt size: max 35% of total financing.
 A loan: € 50-100 million ticket size.
 B loan: depending on syndication to other financial institutions.
 Equity investments: where appropriate.
 Maturity: up to 18 years (the tenor of the EBRD A-Loan can be max 3
years more than B-Loan tenor or the tenor of parallel loans).
 Pricing: market pricing linked to risk level.
 Security: concession agreement, physical security, where possible,
share pledge and also linked to creditworthiness.
 Due diligence: to be carried out by professional advisors.
 Emphasis: smaller cities where the investment’s social role is crucial.
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16. Financing Issues
 The projects are sizable and require significant debt and equity tickets.
 Sponsors expectations are towards aggressive structures:
 Over leverage ?
 Are there prudent cover ratios ?
 Is equity commitment risk of sponsors addressed ?
 Calculation of FX risks associated with the tariff mechanism ?
 Due diligence to be carried out by professional advisors is very
important (legal, technical and financial).
 Project Agreements (Direct Agreement) have been finalised with the
Authorities.
 Environmental, social, health and safety issues can be challenging for
bigger bed-size hospitals.
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17. Integrated Approach to Hospital PPPs
 The EBRD believes that the healthcare PPP programme launched by
the Ministry of Health (MoH) will have a strong demonstration effect for
the rest of Turkey including other sectors and other countries in the
region.
 The EBRD is willing to be one of the long-term financiers.
 Two key areas of support by the Bank to the Ministry of Health:
a) Value for Money assessment, and
b) performance and contract management
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18. Monitoring KPIs for various payment streams
Monitoring
Unit focus
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19. Conclusions
 EBRD has successful experience in financing PPP projects in the
region and in Turkey.
 EBRD supports authorities in developing projects. TC grants partially
finance project preparation, implementation and institutional
development.
 EBRD offers long term debt and equity financing and takes on the
leading role in financing the private operator.
 We have a long term engagement in Turkey and we would like to be a
preferred partner for both public authorities and investors.
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20. Contact
Jean Patrick Marquet
Director – Turkey
t: + 90 212 386 1138
marquetj@ebrd.com
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James Hyslop
Director – Municipal & Environmental
Infrastructure
t: + 44 207 338 6957
hyslopj@ebrd.com
Aslı Erden Öztürk
Principal Banker – Municipal & Environmental
Infrastructure
t: +44 207 338 6871
ozturka@ebrd.com