Focus Georgia Conference

1
Focus Georgia Conference

• April 25-27, 2007

2
General Market Analysis

• PPP market is hyper-competitive.
• States are struggling to open up the pipeline.
• Procurements are sophisticated and challenging
  for both sides.
• Demand for improvement transit grows.
• Toll tolerance increasing versus higher taxes.
• Social enhancements delivered by PPP deals
  important to highlight .
• Foreign ownership remains an issue, though
  fading.
• Gas prices/fuel economy/environmental debate-
  watch closely.
• Unfriendly Congress needs attention from
  industry.
• Next Highway Bill talks starting industry must
  activate.
• Myths often outweigh truths on PPP.

3
US Infrastructure Investment Market

• Investors (financial, institutional) getting more
  involved
• Private placements
• Unwrapped products
• Derivative products such as interest rate swaps
• Subordinated debt

4
US Infrastructure Investment Market

• Development of secondary market
• Financial investors likely become more willing to
  take construction risks on Greenfield projects.
• Those willing to take some of these early risks
  will eventually sell down to operators and
  financial investors as the asset matures.
• Frees up the capital from the original investors
  to take more projects.

5
US Infrastructure Investment Market

• PPPs will contain new schemes to capture
  partnership advantages
• Availability payment.
• Shadow tolling.
• Innovative product where private sectors
  knowledge is fully used.
• High efficiency in the construction phase when
  the contractor can focus on production instead of
  working based on the contract with variation
  orders, claims, time delay, and cost overruns.
• Life-cycle thinking with the total cost over the
  full concession period in focus instead of
  keeping the upfront investment to a minimum .

6
Partnership

• Stronger emphasis on partnership.
• Public and private sector partners working
  together to realize project goals.
• Better educated clients.
• More American contractors as equity investors in
  PPP transactions.
• Benefits development of the industry
• Private sector capital available from more
  sources.
• Establishment of infrastructure funds.
• Increased interest from institutional investors
  for direct investments.
• Willingness to consider different payment
  structures.
• Availability payment Port of Miami Tunnel
• Greater general acceptance of PPP as viable
  alternative.
• Higher frequency of Brownfield auctions to raise
  capital for Greenfield projects or funding for
  improving existing assets.

7
Focus Georgia Conference

• Karl H. Reichelt
• Executive Vice President
• Skanska Infrastructure Development
• 99 Canal Center Plaza, Suite 125
• Alexandria, VA 22314 USA
• karl.reichelt_at_skanska.se
• www.skanska.com/id