Yangtze Investment Opportunities
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Transcript of Yangtze Investment Opportunities
YANGZE PORTSINVESTMENT OPPORTUNITIES
IN ONE OF CHINA’S BIGGESTS GROWTH ENGINES
Port Investor - February 2012By InduStreams
The Yangtze River – An overview
The Yangtze runs through 10 provinces covering a region with a population of 430 million that contributes about 25% of China’s GDP
In 2010 more than 1.3 billion tonnes of cargo and 7.3 million TEU (containers) were transported on the Yangtze
The combination of continuous improvement in capacity (depth and navigability), focus on developing the Western regions and improving the environment create strong fundamentals for continued growth in Yangtze area
The Yangtze river stretches about 6,300km from Tibet to Shanghai of which 2,600km is navigable
The lower reach covers the section between Nanjing and Shanghai, it is the main river transportation channel of the Yangtze River Delta (YRD), which is one of the most developed regions in China.
YRD include the provinces of Jiangsu, Zhejiang and Shanghai. With 130 million people it contributes 22% of GDP and 28% of export/import of China and is expected to remain the key manufacturing and export/import center of the country.
Throughput in this section is about 70% of total Yangtze throughput in terms of cargo weight.
Ocean going vessels ships can reach Nanjing but cannot go beyond due to bridges after Nanjing.
New developments continue to take place throughout the YRD and in particular on the north bank.
The Lower Reach
NanjingNantong
Taizhou
Yangzhou
TaicangChangshuZhangjiagang
JiangyinChangzhou
Zhenjiang
Taica
ng
Nantong
Changsh
u
Zhan
gjiag
ang
Jiangy
in
Taizh
ou
Changzh
ou
Zhen
jiang
Yangzh
ou
Nanjin
g0
40
80
120
160
Throughput (million tonnes in 2009)
Lower reach ports:Shanghai - Nanjing
The middle reach covers the section between Nanjing and Yichang city, and the economies and provinces of Anhui, Jiangxi, Hunan and Hubei.
The hinterland provinces have a population of total 223 million, contributing about 13% of national GDP.
Throughput in this section is about 25% of total Yangtze throughput In terms of cargo weight.
The middle provinces are gaining weight in national industry output and consumption. Transportation via Yangtze has been considered as key factor of development by all provinces in this section.
Depth varies from 3m to 9m in this section allowing for vessel size of 3,000 to 5,000 tonnes or 100-300 TEU for container shipping.
New developments are seen in many of ports in this section and particularly in Wuhan.
The Middle ReachWuhu
Tongling
Maanshan
Anqing
Jiujiang
Wuhan
Wuhan
Yueyang
Jingzhou
Yichang
Middle reach ports: Wuhan - Nanjing
Middle reach ports: Yichang - Wuhan
Maansh
anW
uhu
Tongli
ng
Anqing
Jiujia
ng
Yuey
ang
Wuhan
Jingzh
ou
Yichan
g0
40
80
Throughput (million tonnes)
The Upper ReachWanzhou
FulingChongqing
LuzhouYibin
The upper reach covers the section between Yichang and Yibin.
Chongqing is the main port in the area but the hinterland economy stretches far into among others the Sichuan province.
A population of 110 million live in the area with an associated economy of (GDP) $328 billion or about 6% of national GDP.
Throughput in this section is about 5% of total Yangtze throughput In terms of cargo weight.
Rapid volume growth has been seen in this area particularly in Chongqing.
The “Go West” policy and the improvement of navigation condition caused by the Three Gorges Dam have are playing a big role in that.
Vessels from Chongqing port can be as big as 350 TEU or 5,000 tonnes. All vessels have to pass the Dam to reach lower section of Yangtze.
New development are seen in many of ports in this section and particularly in Chongqing.
Chongqing Luzhou Yibin0
102030405060708090
100
Throughput (million tonnes)
Note: Chongqing data include Fuling and Wanzhou
Upper reach ports:Yichang - Yibin
Infrastructure investment funds looking for investments with growth potential or acquisitions
Pension and insurance funds with allocation for infrastructure in Asia or China that have potential to provide stable cash flows
Private equity funds looking for small to medium sized investments with high potential upsides
Seed investors looking to place early capital for potential sell off at later stage (e.g. to a consortium)
Container, bulk, oil and other operators with interest to develop and cooperate with local port groups and governments
Developers and contractors with ability to take on large marine infrastructure investments
Who might this be relevant for?
EXAMPLE 1 – PORT WIDE PARTNERSHIP
Investment model(an example)
This purely an illustrative slide for a JV formed with a local Port Group or Government. Most agreements are made on a negotiated basis in China and therefore most models are possible. Many port areas have substantial options for further logistics developments on the landside.
Land+ Equity
Resources+ Equity
PortGroup Investor
Joint Venture
NewPort
LogisticArea
X% X%
China Consortium and how to participate
We have cooperation with global as well as local Chinese operators, funds, developers, port groups and many others.
As development and collaboration opportunities emerge we involve clients that we have formalized cooperation with and (if relevant) parties that may benefit our existing client network for specific developments or acquisitions.
China Consortium is already in motion in several locations. If you would like to be part of it please contact us at [email protected] and we would be glad to discuss your needs and relevant scope for the Chinese infrastructure market. For more information about developing markets with Port Investor please go to:
www.port-investor.com/marketdevelopment
APPENDIXChina Consortium by Port Investor
Massive container, dry bulk, oil and liquids markets - representing an immense share of world throughput
New segments such as bio fuel and others in rapid development
Limited competition - many ports with one controlling port group
Strong interest with local governments to attract “multinationals”
Negotiated deals are the norm (vs open tender) Less competition for developments More deal flexibility
11 Of the worlds
20 biggest portsand 50+ large
“secondary” ports
>25% Of world container
throughput
>60% Of world ironore demand
CHINA IN THE WORLD TODAY(a few key numbers on the Chinese economy and its Port Sector)
1.3Billion people
10Trillion USD
PPP adjusted GDP
>400 Mill. tons
of crude oil demand + target to further
increase oil supply reserves
But tapping into this potential requires a significantly different approach than most take - it requires a new model that engages local stakeholders in a positive way. For investors just bringing money the window of opportunity may well have passed in China.
10%Consistent growth last 30 years – may overtake the US by
2030
Opportunities in the Chinese Port Sector
Deal
Leaddevelopment
Focusedmarket engagement
Market scanning and intelligence
1 - 5
10 - 50
100 - 500
1,000 – 5,000
Many believe they can avoid building the pyramid – it’s an illusion, the deals you get access to are only as good as your pipeline.
The deal pyramid illustrates a few key rules of the marketplace:
a) The quality of the output is determined by the input – poor market scanning and market intelligence leads to poor leads
b) The most valuable deal leads are created pro-actively through focused market engagement
c) Each deal lead requires a strong contact and engagement base to develop into an actual investment
d) Only a few of the potential market targets will end up as deals - without a substantial pipeline no investments or deals
Typical challenges in securing investments
Deal
Leaddevelopment
Focusedmarket engagement
Market scanning and intelligence No or little market intelligence
available through desk research
Local presence required for any real insight – several sources
often required for verification
Multitude of local stakeholders including local government and port entities – wide engagement often req.
Any real engagement requires local relations and a real proposition to both
government and port
Actual leads eventuate from close dialogue and relation development – often very unstructured
Once into a stage of exploration of cooperation there is often presumed
exclusivity for a period
With the blessing of local partners and government, deals can be cut quickly
Many Chinese constituents like building on partnerships – one deal can lead to a
larger number of leads and deals
Challenges in the Chinese Port Sector
WHAT A group of operators, investors, and
developers many of which have world leading technology, experience and funding capability
Not a consortium in the traditional sense – there is no forced collaboration just collaboration opportunities in the many markets and sectors
WHY Combined leverage makes it possible to
create much more clout in the local markets
Complementary skill-sets from major port infrastructure fields that will allow synergies as each seek to develop in the market
We have been active in the Chinese port market for nearly a decade – the market and its constituents are well suited to engage with this form of “consortium”
The purpose of China Consortium
DEVELOPERS OPERATORSINVESTORS
Free ZoneMarine Infra.Construction
ContainerOil & LiquidDry Bulk
CONSORTIUM
Pension FundPrivate EquitySovereign Fund
CARGO OWNERS
Shipping linesPort industriesEnergy and resources
PORT PARTNERS
AsiaLatin AmericaMiddle East
APPENDIXChoosing your scope
All constituents have different needs as concerns the target locations and the type of investments. These are just a small handful of examples.
Greenfield Brownfield
Acquisition
Container
Bulk
Oil & Liquid
Logistic Zone
Free Zone
Majority
Minority
Financial investor
Developer
Operator$10+ million
$100+ million
$1+ billion
Seed investor
How can we help you……relevant scope (1)
Singapore Dampier Corpus Christi London SouthamptonShanghai Hamburg Gladstone Bergen WilhelmshavenRotterdam New York Primorsk Taichung CalaisTianjin Nantong Bremen Bombay BaltimoreNingbo Vancouver Long Beach Barcelona Forth PortsGuangzhou Yantai Corpus Christ Sao Sebastiao BilbaoQingdao Nanjing Algeciras Lake Charles PittsburghHong Kong Kitakyushu Pohang Trieste YanbuQinhuangdao Tangshan New Orleans Texas City KarachiDalian Itaqui Grimsby Baton Rouge New MangaloreBusan lianyungang Beaumont Saldanha Bay TampaNagoya Tubarao Huntington Paradip Milford HavenShenzhen Marseilles Constantza Jeddah OdessaSouth Louisiana Newcastle Mobile Tees LeghornHouston Kobe Hampton Roads Manila ParanaguaAntwerp Amsterdam Ports St. Petersburg Alexandria PaulsboroUlsan Osaka Valencia Taranto TarragonaChiba Tanjung Pelepas Plaquemines Gothenburg ValdezPort Hedland Sepetiba Dunkirk Tampa Texas CityPort Kelang Richards Bay Madras Jubail LiverpoolRizhao Hay Point Jawaharlal Nehru Tanjung Priok SavannahYingkou Novorossisk Los Angeles Zeebrugge BrisbaneKaohsiung Tokyo Genoa Mormugao LubeckInchon Santos Calcutta Durban PascagoulaYokohama Le Havre Izmit Duluth-Superior Angra dos Reis
Deal
Lead development
Focused market engagement
Market intelligenceand scanning
1-5
10-20
50-100
1,000-5,000
Step 1Focus among the many
Step 2Engage the most relevant
Step 3Deal development
Step 4Closing the deal
How can we help you……relevant scope (2)
Each constituent have different needs as concerns the deal pyramid. Some look for solutions all the way from market intelligence to closing actual deals, others only up to and including engagement of the relevant authorities and potential partners.
APPENDIXAbout Port Investor
InduStreams was founded in 2011 with a mission to create a more transparent, connected and informed infrastructure market place.
We launched Port-Investor.com in July 2011, a specific sector pilot with focus on port investing and the global port industry.
Current state of affairs
200+ port groups and 1,000+ executives and decision makers in the network and increasing China Port Investor and other regions are being launched Specific concepts in development with select investors and port groups
The Vision
Connecting all substantial port markets (5,000+ globally) with investors (1,000+ globally) Creating a transparent and informed market place driven by industry leaders and experts Unleashing the potential inherent in this sector by creating thousands of new investment
opportunities (we expect investment potential to exceed $1 trillion)
Want to know more or simply engage……contact us on: