Ronesans Holding and its group companies have closed nearly €4bn project financing this year, including €1bn debt for the Nakkas-Basaksehir motorway in Turkey. By Cristiana Sandeva
In October, Ronesans and its South Korean partners signed a 15-year €1bn project finance package with international commercial lender and development financiers backing the €1.4bn Nakkas-Basaksehir motorway project. All debt is denominated in euros. A total of €550m in debt was provided by development finance institutions and just short of €500m was lent by commercial banks and fully covered by export credit agencies.
The DFI tranches include €240m from the European Bank for Reconstruction and Development, €150m from the Asian Infrastructure Investment Bank, €120m from the Islamic Development Bank and €40m from the Islamic Corporation for the Development of the Private Sector.
The commercial lenders included Deutsche Bank, Natixis and Standard Chartered. All commercial tranches are export credit agency covered by Dutch insurer Atradius, Switzerland’s Serv and the Islamic Development Bank's ICIEC.
The EBRD tranche is structured as an A/B loan with the B portion covering €45m from Bank of China. No other B loan mechanisms have been employed, Ronesans’ chair of the board of directors İpek Ilıcak Kayaalp confirmed with PFI.
The sponsors were awarded a 20-year concession in 2020 by the general directorate of highways of Turkey. The project company is owned by Ronesans and a consortium of South Korean investors including Samsung C&T, Korea Overseas Infrastructure & Urban Development Corp and KIAMCO PIS Infra Special Asset Investment Trust No 1, established by the South Korean government and managed by KDB Infrastructure Investments Asset Management.
The project will be built by Ronesans' REC Uluslararasi Insaat Yatirim Sanayi ve Ticaret under a lump sum turn-key, fixed-price and date-certain agreement. The operations and maintenance will be run by Ronesans' RNS PPP Altyapi Ticaret, Samsung C&T and Korea Expressway Corporation, the project operator.
Despite South Korean partners in the project, no Korean export credit coverage is featured in the project financing, which Kayaalp said is due to the fact that “the Korean partners entered the project during its later stages, by which time the financing structure had already been mostly shaped and agreed”.
Outside of ECA coverage, additional derisking mechanisms have been put in place for the project, including a debt assumption agreement that was executed with the Turkish administration to secure senior loan and derivative risks.
“This was the most important derisking mechanism in the deal,” Kayaalp said, adding that “ICIEC coverage as a part of the financing was noticeable”.
“With regards to the prevailing market conditions and the current financing examples, it is fair to state that the financing terms of the Nakkaş project are highly value adding,” Kayaalp said. “This is the only highway BOT project fully financed by foreign banks in Turkey and closing this financing with such a diverse and different financial institution group created valuable experience for the group.”
The project benefits from a minimum revenue guarantee mechanism which is subject to indexation with euro CPI on a semi-annual basis. The minimum revenue guarantee of 150,000 daily passenger car units will be paid semi-annually. Further instruments benefiting the project include an initial toll base rate of €0.0678/km in real terms, excluding VAT and other taxes. Both MRG and the tolls are paid in lire and indexed for euro inflation.
The 45km project comprises 31.31km of main and connection roads, a 1.6km cable-stayed bridge across the Sazlidere valley, 17 overpasses, 19 underpasses, 56 culverts, 11 junctions and seven viaducts.
“Ronesans Holding has successfully completed numerous investment projects in Turkey, totalling €8bn to date and mobilising approximately €2bn in foreign direct investment and around €4bn in foreign financing,” Kayaalp said.
A significant portion of the €4bn project financings closed throughout 2024 stems from the Nakkas-Basaksehir financial close, but that has not been Ronesans’ only nor its latest deal highlight. It is building the 286km Mersin–Adana–Osmaniye–Gaziantep high standard railway project in its home country and is working on adding solar and wind power plants to its hydropower portfolio through a global partnership with TotalEnergies. The company is the leading private investor in Turkish hospital PPPs and has been active internationally in the petrochemical industry via a partnership agreement signed in 2018 with Algerian national oil company Sonatrach.
In late November, Ronesans and Sonatrach signed the US$1.1bn project financing on the US$1.7bn Ceyhan polypropylene and propane dehydrogenation scheme in Turkey. Spanish ECA Cesce covered the commercial debt tranche of up to US$600m with financial adviser ING, Arab Energy Fund, formerly Apicorp, BBVA, DenizBank and DZ providing the bank liquidity.
The US Development Finance Corp provided a US$500m 15-year direct loan. Ronesans and Sonatrach are providing US$600m of equity on a 66:34 basis. Linklaters advised the sponsors and A&O Shearman advised the lenders.
The scheme will produce 472,500 tonnes of polypropylene annually and is expected to contribute US$250m to Turkey's foreign trade balance every year by reducing polypropylene imports and saving on foreign exchange. The scheme is next to the Baku-Tbilisi-Ceyhan and Turkish Petroleum oil pipelines.
Ronesans is developing a US$210m liquid cargo terminal and storage facility at Ceyhan with Norwegian company Stolt-Nielsen on a 66:34 basis. This investment will mostly be financed through Cesce-covered lenders.
In October, Ronesans issued Turkey’s first sustainable bond on Euronext Dublin with a US$350m sustainable financing issuance, rated B+ by Fitch. The bond was almost twice oversubscribed and received significant investment from the IFC and Germany’s DEG as well as a US$55m commitment from the EBRS. The issuance is due to mature in 2029. The bond is non-callable for two years and has an 8.5% fixed semi-annual coupon. Key covenants include maximum consolidated net leverage ratio of 3.5 times, minimum consolidated fixed-charge ratio of two times and minimum US$100m offshore liquidity to be maintained.
Proceeds will be used to finance hospital projects, social housing projects, investments in clean transportation, data centres, energy efficiency projects and infrastructure projects that ensure access to clean water internationally. The company is targeting adding 2GW operational renewable capacity to its portfolio by 2029. Earlier in the year, Ronesans also closed the 15-year US$165m project financing for its US$213m 189MW YEKA RES-3 wind farms in Turkey via green credit coordinator HSBC and joint arranger ING, guaranteed by Germany's export credit agency Euler Hermes.
The EPC contractor for the project is Germany-based Ronesans subsidiary, Heitkamp Industrial Solutions while turbine supplier Nordex, also German, which explains Euler Hermes as the sole ECA. The financed projects are the 80MW Malatya wind farm, the 50MW Corum wind scheme and a 59MW wind farm, which will have guaranteed revenues under a feed-in tariff agreement with the Turkish government.
Outside its home country, Ronesans’ latest highlight was the successful financial closing of a €365m senior debt package from six development financiers for the €450m Kokshetau hospital public-private partnership, the first healthcare PPP in Kazakhstan. The lending group was led by the EBRD with a €105m tranche and includes €260m of parallel debt from the AIIB with €105m, and €155m spread across France's Proparco, Germany's DEG, the Islamic Development Bank's ICD and the Development Bank of Kazakhstan. ICIEC is providing full political risk insurance for the €105m equity portion and 95% coverage on the debt portion for non-honouring of sovereign financial obligations.
The project agreement was signed at the end of 2022 for the construction of the PPP hospital in Kokshetau with 630 beds in a 111,000m2 area. After two years of construction, Ronesans will hand over the project to local authorities and will remain responsible for the operation of the hospital with a limited service scope for five years. “Looking ahead and considering the investment plans currently on our agenda, we project that within five years the total value of investments we will have completed in Turkey will exceed €12bn,” Kayaalp told PFI.
“The current state of the Turkish infrastructure market is not as vivid as it has been in recent decades, considering macroeconomic challenges including high inflation, currency volatility, and increased borrowing costs experienced in recent years,” said Kayaalp. She said that “although government incentives are still present, fiscal pressures may prioritise specific sectors such as high-speed rail and highways within transportation and renewables and nuclear within energy”.
“We anticipate that the direct foreign investment we bring to our country will rise to €2.5bn, while foreign financing is expected to approach €7bn,” she said, highlighting that the top priority in the coming years “will be to complete the construction of projects for which we have worked tirelessly and are now finalising financial closings, ensuring we remain on track with our plans”.
Achieving energy efficiency and aligning infrastructure projects with net-zero goals in Turkey involves a combination of strategic planning, innovative technologies, and supportive policies. On the EPC side of things, key factors to consider will be to prioritise sustainable design through integrated planning, green building certifications and passive design strategies, Kayaalp said.
“Key factors that align with our sustainable design goals include upgrading technology and materials, such as energy efficient equipment, smart systems and sustainable materials during construction stages, and improving operational efficiency through energy management systems,” she said, as well as integrating onsite renewable energy systems into infrastructure projects and encouraging green energy procurement.
Ronesans’ operations span 30 countries across Europe, Central Asia, and Africa, including subsidiaries such as Ballast Nedam in the Netherlands and Heitkamp Industrial Solutions in Germany. According to FY23 results, 35% of the Holding’s consolidated revenues were generated via Ballast Nedam.
“Extending Ronesans Holding’s infrastructure capability as both contractor and investor that we gained in Turkey, especially in the healthcare field, to other countries will be the main catalyst for international expansion”, Kayaalp said.
“We believe it is now time for most of the Ronesans Holding companies, including the Holding itself, to further expand the business and share our future potential with small investors via public offerings.”
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