Proposal for Co-investment Framework in Maritime Sector with KEXIM and KIC

Backdrop of the Proposal

SECTION 1

Trend of Investment Appetite

Strategic Asset Allocation of 28 Global Pensions & Funds

Source : Financial Focus

Equity Bond Alternative Investment

y y

Target Coverage and Investment Angle

KEXIM/KDB Shipping Fund, KAMCO Tonnage

Equity Investment

Debt Financing (Loan, Guarantee)

Traditional Maritime Industry

Modern Maritime Industry

Conventional Vessel

Offshore

Infrastructure (Port, Power Plant, etc.)

Global Maritime Coinvestment Framework

Global Infrastructure Fund

Marine Resource

Marine Finance Center

Introduction of Investment Opportunities in Marine Sector

SECTION 2

Offshore Plant

FPSO (Floating Production Storage Offloading)

Deal Size: Around USD 1 billion

Project Site: North Sea, South America, etc.

Project Sponsor: Oil majors (e.g. BG, Statoil, etc.)

EPC Contractor: International consortium

FLSO (Floating Liquefaction Storage Offloading)

Deal Size: Around USD 2 billion

Project Site: West Africa, Australia, etc.

Project Sponsor: Oil majors, Liquefaction Toller

EPC Contractor: International consortium

FPP (Floating Power Plant)

Deal Size: Around USD 1 billion

Project Site: Emerging Countries, etc.

Project Sponsor: Local Governments

EPC Contractor: International consortium

Desc : Knarr FPSO (Sponsor : BG, Operator : Teekay, EPC : SHI)

Desc: Estella FPP (Sponsor : Dominican Republic, EPC : SHI)

Port Terminal & Shipping Equipment Marine Tourism Infrastructure(Hotel, Aquarium, etc)

Deal Size: Around USD 100 million ~ 1 billion

Project Site: Logistic Hub Cities

Project Sponsor: Local Port Authorities

EPC Contractor: Construction Firms

Deal Size: Around USD 100 million ~ 1 billion

Project Site: Marine Tourism Regions

Project Sponsor: Leisure Service Conglomerates

EPC Contractor: Construction Firms

Desc : Busan New Port (Sponsor : HMM, BNCT, etc.) Desc : Busan Paradise Hotel (Sponsor : Paradise Group)

Maritime Infrastructure

Maritime Logistics

Container

Deal Size: Around USD 100~500 million

Project Sponsor: Major Shipping Companies (e.g. Maersk, MSC, CMA-CGM, etc.)

Builder: Korean Ship Builders

Dry Cargo

Deal Size: Around USD 100 million~400 million

Project Sponsor: Major Shippers, Shipping Co.

(e.g. Vale, Cargill, etc)

Builder: Korean Ship Builders

Liquid & Gas

Deal Size: Around USD 400 million~ 6 billion

Project Sponsor: Oil & Gas majors

Builder: Korean Ship Builders

Desc : Maersk Container Ship (Operator : Maersk)

Desc: LNG Carrier (Sponsor : Gazprom )

Target Investment Profile

Risk vs Return

and Early Stage

Profile (Moderate

Risk & Return)

Traditional Debt

Investment

Final Stage Profile

Risk

Return

전통 채권투자

1

2

Traditional Debt

Investment

Co-investment Framework

SECTION 3

Co-Investment Opportunities from Different Angles

Project Loan

EPC Contractor

Strategic Investors

Debt Investors

Offtaker

Financial Investors

Financial Advisor Escrow

A/C

Project Vehicle

Equity

Debt Mortgage

Construction Contract

Purchase Contract

Toll, Tariff,

etc

Project Bond

Flexible Structure → Usually higher yield with implicit options

Relationship-based → ECAs, MDBs involved

Yield Level → Swap+150~450bps

Comparable to Project Loan Economically → but securitized

Formulaic Structure → minimal options

Yield Level → option yield deducted from comparable loan

Equity

Risk & Return Adjusted by Leverage → Elaborate financial models required

Yield Level → Mostly greater than 10% along with downside risk exposure

Equity

Marine Project (Ocean Plant- and Vessel-

Based)

Mezzanine

Debt and Equity Integrated

Debt/Equity Hybrid or Junior Debt → Upside potential with lower yield; or → Higher yield with junior claim over underlying asset

1 2

3 4

Co-Investment Framework

SPV

Project Fund1

SPV

Project Fund2

SPV

Project Fund3

SPV

Project Fund4

cofund

Co-investment Framework

Offshore

Plant

Maritime

Infrastructure

Deal Sourcing , Advisory

Participants in

CROSAPF

Maritime

Logistics

Business

Acquisition

KEXIM, Global Financial Agents

Co-Investment Framework

12

< Co-investment Framework in Maritime Sector >

Program Size (Incipient Target) USD 200 Million (Open-ended)

Program Type Co-investment Program for Multiple Project Funds

Program Leader KEXIM / KIC

Co-Investors Sovereign Wealth Funds, Pension Funds, Investment Banks, etc. (Open-ended)

Target Industry

① Offshore Plant

② Maritime Infrastructure

③ Maritime Logistics

Procedure

① Program Leaders seek relevant investment opportunities .

② Program Leaders conduct due-diligence and make independent investment decisions.

③ If Program Leaders consent to join the deal, they propose to get Co-Investors on

board sharing the opportunity.

④ Co-Investors go through discrete and independent due-diligence and make decisions.

Distribution Plan – Driving Force

13

KEXIM/KIC-Driven Market-Driven

Operating Organization

KEXIM

Global Maritime Coinvestment Framework

Co-investment Framework

K I C

Maritime Infrastructure

Maritime Logistics

Offshore

Deal Sourcing

Manage

CROSAPF

Manage

Co-work

Potential Project

SECTION 4

Leasing Solution for Ultra-Large Containerships

Transaction Overview

Asset 3 Ultra-Large Containerships

Lessor a SPV owned by FIs

Lessee One of European Shipping Companies

Deployment One of Major Shipping Alliances

Ticket Size (Equity)

USD 120M

Leverage Size (Debt)

USD 360M

Redemption TBD

Yield

< Debt : Equity ratio = 75% : 25% >

- Equity Investment : [Target 10.0% / p.a]

- Senior Investment : [Target L+ 2.0% / p.a]

Ongoing

Considerations

① Purchase Option Strike Price

② Periodic Rental Level

③ Minimal Residual Value Risk

Co-investment SPV

Shipping Company

Alliance

Investors

① Invest and Own

③ Lease & Purchase Option

② Financing Support

⑤ Deploy

Financial Advisor

⑥ Manage

④ Rental

Ship Manager

⑥ Ship Management

Financiers