Green Investment Services

Our in-country teams act as trusted advisors to governments and other stakeholders. They have a unique and deep understanding of local green growth needs, making GGGI optimally placed to provide a suite of Green Investment Services to countries seeking to green their current and/or future infrastructure. Below is a brief overview of the services our Green Infrastructure Opportunities Teams provide.

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From green growth plan to green investments

GGGI supports countries in developing their Green Growth plans. The Green Growth plans’ success will be ultimately measured by how these can be translated into concrete investments in either new green infrastructure or in retrofitting (or greening of) existing infrastructure.

This process requires:

  • An adequate enabling environment for green investments;
  • Capacity to design projects;
  • Rewards commensurate with risks;
  • Matching;
  • Achieving financial closure

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Supporting governments in developing bankable projects through a dedicated Green Infrastructure Opportunities Teams

Conducive environment for investment

Stable and consistent policy as a pre-condition for investments

GGGI contributes to creating the enabling environment for green investments:

By supporting Governments in:

  • Designing (fiscally) sustainable incentive frameworks;
  • Creating fiscal tools that are aligned with green growth objectives (e.g. investment tax credits, accelerated depreciation, production tax credits, etc.);
  • Ensuring tax neutrality towards different financing forms and structures (including the establishment of project companies and/or SPVs).

Project preparation support

Capital chases good projects

The lack of adequate deal flow seriously prevents green investment from realizing its potential.
GGGI directly supports deal flow generation by advising Governments on:Screen Shot 2015-01-21 at 9.50.41 AM

  • Setting up Infrastructure Project Management Units with the authority and skills to design commercially and technologically viable concessions;
  • Applying international norms and standards for infrastructure project design (pre-feasibility studies);
  • Standardizing procurement procedures across ministries;
  • Organizing transparent tendering processes;
  • Supporting strategic prioritization of infrastructure projects (taking into account the Government’s balance sheet, options for private sector participation in infrastructure development and management as well as expected social, environmental and climate returns);
  • Managing a prospective deal flow.

Through structuring project development facilities to overcome initial funding barriers / or tapping into existing facilities in order to co-invest with project sponsors in this high-risk phase.

De-risking

Bankability of projects is seriously affected by inadequate risk /return profiles.

Both non-project and project related risks affect the commercial viability of projects, which might otherwise make technological sense. GGGI’s Green Investment Services include advising Governments on:

  • Mitigating Non-project related risks (including political risks, expropriation of assets, local currency hedging, etc.);
  • Mitigating Project related risks by accessing domestic/global climate and infrastructure finance facilities and mechanisms;
  • The establishment of one-stop institutions to handle all green growth related incentives and de-risking instruments, in some cases under the form of Green Investment Banks;
  • Developing domestic information exchanges on project developer risk mitigant coverage and investment conditions (e.g. RiskEx).

Refinancing operating assets is key to scaling up investments

Scaling of green investments is ultimately achieved through either the transfer of loans from commercial bank balance sheets or the sale of project company equity stakes to institutional investors’ balance sheets whose liabilities are typically matched by infrastructure project cash flows. This virtuous recycling of funds leads to multiplying the leverage factor of public resources.

GGGI assists Governments setting up domestic securitization structures (in countries with relatively deep capital markets) by:

  • Bundling operating assets (i.e. generating steady streams of cash flows);
  • Providing public loss layers to attract domestic institutional investors;
  • Aggregating projects and issuing asset backed securities.

Deployment in 2015

GGGI is an active player in the design of transformative climate and infrastructure financial instruments at the global level. It is able to leverage networks of investors / project developers and deploy dedicated teams locally to support project development while engaging with Governments to overcome non-project related barriers.

GGGI will be initially offering its Green Investment Services in Indonesia, Vietnam, Mongolia and Rwanda.

Green Infrastructure Opportunities Team

Required skills

  • Policy Specialists: are able to design fiscally sustainable incentive frameworks and fiscal instruments conducive to green infrastructure investments. They develop the framework required for private sector involvement in infrastructure operations and address legal aspects related to both permitting and the establishment of special project companies. They analyse the “as-is” situation and identify potential barriers to investment and provide early recommendations;
  • Infrastructure Management Specialists: are able to define the organizational structure to be established / strengthened within Government for efficient infrastructure project management. They develop the skills to design pipelines of viable infrastructure deals. They particularly provide recommendations on the drafting of site selection, requests-for-proposals / expressions-of-interest; tendering and bidding processes. They apply internationally recognized norms and standards for prefeasibility studies and support the pre-development phase (i.e. draft development budget and early project economics including financial model).
  • Risk Allocation Specialists: able to slice remaining non-commercial risks and provide menus of credit enhancement and guarantees (available risk mitigants).

Initial in-country deployment

From its headquarters, GGGI will be able to rapidly deploy teams with the required skills and experience to match key country requirements. In the selected target countries a typical intervention would comprise two phases:

  • Phase 1: an identification mission, composed of a Senior Investment Policy Specialist and a Senior Infrastructure Management Specialist. The deliverable from this identification mission would be a concrete Action Plan to move towards a Prioritized Portfolio of Green Infrastructure Opportunities (second phase).
  • Phase 2: Direct Support to implement the Action Plan, leading to the delivery of a Prioritized Portfolio of Green Infrastructure Opportunities, with the ability to call for pre-feasibility studies (PFS) according to internationally accepted norms and standards (including social, health and environmental standards). This phase requires:
  1. One Senior Investment Policy Specialist;
  2. Two Infrastructure Management Specialists (one senior/one junior);
  3. One senior Risk Allocation Specialist.

Additional in-country deployment

If required, GGGI can deploy additional experts to assist Governments in both generating market responses to requests-for-proposals and/or tenders and managing the required project developer selection processes. GGGI may also identify financial sources to support the process leading to PFS.

Summary

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