Qatar Infrastructure Projects Opportunities & Challenges for Italian Companies

Qatar Infrastructure ProjectsOpportunities & Challenges for Italian Companies COFINDUSTRIA Meeting - March 2012 Philippe Jouard

Before Anybody Cracks That Joke … We are NOT this type of CONCORDIA … … and I am NOT this type of CEO …

Table of Contents Concordia Capital Qatar: a land of opportunities for international companies Local banking environment in Qatar Concordia Capital: a unique partner for international companies in Qatar

Concordia Capital at a Glance • Concordia Capital is an independent investment advisory firm headquartered in Doha (Qatar) and regulated by the Qatar Financial Centre Regulatory Authority (Cat. 4) • Our Core strategy: • Act as a strategic bridge between the GCC / MENA and Europe / Asia regions • Be fully client-centric, leveraging our deep understanding of key investors • A unique origination approach: • Regular dialogue with a group of selected investors (sovereigns, pension funds, family offices corporates) and financial institutions • Identification of value-adding transactions within specific geographic areas and key sectors in our proprietary network • In-depth analysis of potential transactionson their own merit • Our typical role is advisor and / or arranger of transactions (M&A, Project Finance, Corporate Advisory) from origination up to execution and closing

Our Market Intimacy Brings Better Deals • Selectivity: each transaction is screened based on key criteria and intimate knowledge of Concordia’s investors’ and financing institutions current objectives: • In terms of industries, size and deal structures • In terms of geographyand strategic deployment • In terms of feasibility • Total independence allows Concordia to elect not to close a deal • Exit strategies, when needed, are carefully identified upfront in all cases A world class standard investment banking firm operating out of Qatar with primary business focus in Europe, Middle East and Asia

Selective Advisory Services • We focus on two main fields of activities: • Strategic advisory, including M&A (buy-side, sell-side) and fairness opinions • Project finance advisory, often including a deep involvement in the early phases of the projects or even at concept stages • Dedicated sectors in tune with our target markets: • Infrastructure • Real estate & Hospitality • Energy & energy related services • Natural resources • Concordia also performs Portfolio advisory missions on private equity and listed assets portfolios for GCC institutions M&A Assets Projects

Unique Cross-Border Philosophy Looking at the world in a different way ★ ★ ★ ★ ★ ★ ★ Doha Southeast Asia Latin America ★ Singapore • Concordia has favored a targeted approach over the traditional “hub-based” delivery model of other investment banks, as it saves our client’s time and efforts and increases the likelihood to close meaningful transactions • Concordia Capital’s selectivity is also reflected in the nature of the transaction on which our firm is focusing

A Seasoned Team, Vast Combined Experience • Senior team members all share the following three characteristics: • A vast combined experience as deal makers and entrepreneurs • International careers on two continents at least • In-depth knowledge of and experience in the products offered by Concordia • The founders and senior members have originated, executed and closed corporate transactions for a cumulative amount above US$ 10 billion in Europe, MENA and Asia • Concordia may hire ad hoc transaction execution partners on any given transaction to benefit from additional, bespoke industry expertise

Qatar – the Fasted Growing Economy in the GCC Qatar at a glance World’s richest country, with gross domestic product (GDP) per capita of USD 97,967 in 2011 Hydrocarbon revenues, account for 60% of GDP World’s largest exporter of Liquefied Natural Gas (LNG) and has the 3rd-largest gas reserves after Russia and Iran, on top of proven oil reserves of 26 billion barrels Commitment to create a knowledge-driven economy through the National Vision 2030 3rd-largest projects market in the GCC, with total pipeline of USD 218bn Qatar’s population could reach 2.6m by 2026 from 1.6m currently Multi-billion dollar transport master plan unveiled to construct a state-of-the-art public transport system and sophisticated road network DOHA Qatar performs strongly thanks to substantial government support and sound economic fundamentals Source: CIA Factbook, Google Maps

The 2022 FIFA World Cup – a Catalyst The 2022 FIFA World Cup Rationale for collaboration with international partners Qatar was selected on a pledge to spend USD 70bn on infrastructurein preparation for the event A number of projectsare to be completed before 2020 US’ firm CH2M Hill * appointed to manage the World Cup construction program UK engineering and design firm Atkins selected to establish and run Qatar’s Central Planning Office, to coordinate all current and planned major infrastructure schemes that underpin the National Vision 2030 Appointment of these program managers is an important step in delivering the projects planned over the next 20 years Collaboration with local contractors key to winning work in Qatar. Forming an effective joint venture with a local partner can help reduce project risks Delivering what is required will be a challenge and will create logistical and financing bottlenecks Qatar will therefore need to employ reputed international contractors and project managers in order to get the projects completed on time Qatar is a land full of opportunities for international firms * Global leader in consulting, design, design-build, operations and program management

Contracting Trends Create Lots of Opportunities • Local and regional firms dominated the GCC projects market, picking up 53% of the USD 112bn-worth of contracts awarded recently across all sectors in the region • Qatar emerged as the third largest projects market in GCC in 2011, awarding USD13.7bn of contracts. With the 2022 FIFA World Cup infrastructure programme, it is a market that is of increasing interest to international firms • The dominance of domestic contractors may be short lived as the local companies are reaching their full capacity as a number of new projects are announced • Companies from China, South Korea and Japan have led the international companies in winning new contracts. Due to the Eurozone credit crunch, the role of European firms has been more limited • There are also plenty of opportunities for international companies in region’s oil and gas sector Pipeline - GCC Projects Market (USD bn) Source: Company websites, MEED, Zawya, Bloomberg, Reuters, Factiva, MergerMarkets

Major Providers of Opportunities for Contractors (1/3) • Qatar Railways Company (“Q Rail”) was founded in 2011 to support and coordinate the growth of Qatar’s rail industry • Fully owned by Qatar Railways Development Company (“QRDC”), a joint venture between Qatari Diar Real Estate Investment Company and Germany’s Deutsche Bahn AG • Overall developer of the Qatar Integrated Rail Program, consisting of several rail projects • Plans to spend USD 35bn for freight and passenger rail network (651 km, 98 stations) • Established in 1995, Qatar Foundation is a non-profit organization which aims to transform the country into a knowledge-based economy by 2030 • Supported by an endowment funded by the country’s enormous revenues • The government has pledged to allocate about USD 3.6bn a year • Since 2006has launched about USD 20bn-worth of construction projects. Its schemes are managed by Amstad • Also involved in the “Msheireb project” which entails the revival of a 31-hectare area, including construction of more than 100 buildings Major Qatari companies and organizations will provide a growing number of income-generating opportunities for international partners Source: Company websites, MEED, Zawya, Bloomberg, Reuters, Factiva, MergerMarkets

Major Providers of Opportunities for Contractors (2/3) • Qatar Petroleum (“QP”) is responsible for developing Qatar’s vast oil and gas reserves • One of its major project is the development of petrochemicals complex in RasLaffan • Aims to be the world leader in Gas To Liquid (“GTL”) production • Has diversified its business, including through large JVs. With the 2022 World Cup preparation picking up, demand of some of its non-O&G business should grow • Global energy consumption is expected to increase by 25% by 2030 with the focus on use of cleaner fuels, such as natural gas • Kahramaa is the utility provider which has a strong track record in project delivery • It invested more than USD 20bn in Qatar’s power and water sector between 2000 and 2012(USD 15bn invested in power projects) • Plans to invest over USD 5bn by the end of next year to boost its power and water production • Projects include 2,250 MV power plant and two water desalination plants • Continuously expanding its transmission and distribution network. In 2011, It awarded USD 153m worth of contracts for installation of power cables and overhead lines and USD 630m in substation contracts • Kahramaaplans to increase its water reserves to seven days of storage by 2016. It plans to achieve this through the construction of five new mega reservoirs, which will cost USD 2bn to construct Source: Company websites, MEED, Zawya, Bloomberg, Reuters, Factiva, MergerMarkets

Major Providers of Opportunities for Contractors (3/3) • Qatar’s Public Works Authority (“Ashghal”) was established in 2004 as a government body to coordinate the design, construction and maintenance of public infrastructure • Currently focusing on road projects in the run-up to the FIFA 2022 World Cup • Plans to invest USD 20bn in building and upgrading roads and drainage infrastructure by the end of 2015 • Planning to build 136 km of new roads by 2014. • Some of the roads projects to be tendered include parts of Doha Expressway, 2nd phase of the Lusail Expressway, Al-Khor Highway, and New Orbital Highway • Qatari Diar(“QD”) was established in 2004 by Qatar Investment Authority with USD 1bn • Its primary responsibility is real estate development with focus on social and community projects, beside projects for commercial gains • Owns USD 60bn of assets in real estate companies and banks • Master planner and developer of Lusail City in Qatarto build a residential area to house 200,000 people across 35 sq. km by 2025 • Linked to the USD 35bn national railway system in Qatar • Foreign projects include: Egypt, Tunisia, Sudan, Vietnam and Yemen Source: Company websites, MEED, Zawya, Bloomberg, Reuters, Factiva, MergerMarkets

Main Qatari Projects Pipeline (1/3) Source: Company websites, MEED, Zawya, Bloomberg, Reuters, Factiva, MergerMarkets

Key Challenges for Qatar Qatar must build World Cup related infrastructure by 2020. Actually, the State will have to ensure most of the planned infrastructure schemes are finished 2 years earlier than originally planned Building USD 70bn-worth of infrastructure in 8 years is a stern challenge. This significantly increases the pressure on both clients and contractors The country’s financial sector is also likely to be stretched. Although many schemes will be funded by the State, banks will be under increasing pressure to provide bid and performance bonds and other financing requirements International companies entering in the market will also face challenges, such as competition from already established firms in Qatar International companies will have to make sure that adequate credit lines from banks are in place for them to work smoothly ✓ ✓ ✓ ✓ ✓

Structure of the Banking Sector in Qatar 4 Qatari Islamic banks 6 Qatari Conventional banks 1 Qatari specialized bank 7 foreign banks with local presence

Focus on the Top 5 Banks in Qatar (1/5) Loan classification Loans & deposits growth Spreads Source: Zawya, Bloomberg (as of 12/03/2012), “Qatar Banking Sector” Global Research – Global Investment House (March 2012)

Credit Growth Driven by Government Spending Lending growth in Qatar • In 2011, Qatar led GCC in terms of bank credit growth (+28%) reaching USD 103bn in December 2011 • Lending to the public sector increased by 45% and represented 40% of total loans (19% increase to the private sector) • Within the private sector, credit expansion was largely driven by the real estate and construction sectors, which grew by 33% • Lending to the public sector has grown at a CAGR of 47% in the last five years (25% increase to the private sector) • The easing of monetary conditions in 2011 coincided with the launch of some infrastructure-related investments which helped growth Public and private sector credit growth Credit growth by industry Source: Qatar Central Bank, “Qatar Banking Sector” Global Research – Global Investment House (March 2012)

Credit Growth Will Remain Strong in Qatar Credit growth for major Qatari banks • Credit growth was strongest for the two banksQatar National Bank (“QNB”, +47%) and Masraf Al Rayan(“MAR”, +37%) dominating public sector lending • Commercial Bank of Qatar (“CBQ”, +24%)is aggressively looking at growing its public sector portfolio • Growth was relatively lower for Doha Bank (“Doha”, +16%) and poor in the case of Qatar Islamic Bank (“QIB”, +0.3%) • The focus on developing the physical and social infrastructure is expected to spur loan growth and sustain it at high levels • Qatari banks’ proportion of loans to the public sector is expected to expand over the near term • Within the private sector, near-term growth has been forecast to be mainly in the real estate sector and eventually trickle down to the contracting sector as projects get underway Loan book comparison Loan book break-up (2011) Market share comparison (2011) Banking sector perspectives Contractors are likely to have access to growing credit facilities in Qatar Source: Qatar Central Bank, “Qatar Banking Sector” Global Research – Global Investment House (March 2012)

Financing Challenges for International Companies The 2008 financial crisis dramatically curbed credit availability.The situation is particularly bad in Europe where banks in different countries are facing difficulties and avoid taking risk outside the region Companies are required to provide bid bonds to local project sponsors at the time of biding as well as performance and advance payment bonds when the project is awarded Project sponsors in Qatar prefer to receive guarantees issued mainly from local banks as it is easy for them to claim in case of default or non performance Local banks therefore play a very important role in providing funded and non-funded commitments to contracting companies Local banks usually avoid taking direct exposure to international companies European companies are at a competitive disadvantage compared to regional and Asian companies. Many banks in Europe cannot support the companies and banks in Qatar having cancelled credit lines of many Europe based banks, European companies have been losing out to local and Asian companies in many important projects awarded during the last few years ✓ ✓ ✓ ✓ ✓ ✓ European companies may continue losing market share unless they secure credit facilities

Italian Spreads – Penalizing Levels? bps 1 Year maturity • Even some of the strongest Italian financial institutions, such as Intesa, are unfortunately not immune from the evolution of Italy’s sovereign spreads • The situation indirectly erodesthe ability of Italian companies to be fully competitive on Qatari tenders bps bps 3 Year maturity 5 Year maturity

Concordia Capital Can Assist in Securing Credit Facilities Foreign companies: challenging access to local facilities • Local banks have a quasi-monopoly in providing guarantees to project sponsors. Most of the time, they do so against counter guarantee of international bank guaranteeing the international company • Therefore, getting local bank credit lines is key to any project for bidding companies • It is very difficult for any new company to get any credit facility from local banks without involvement of an acceptable home country bank • Concordia Capital’s strong relationship with the banking sectorenables us to help international companies secure much needed credit facilities from local banks with the best possible terms • We do so by discussing the proposal at every level of decision making as opposed to a single relationship person • We generally arrange first unfunded facilities to provide an international company flexibility to bid for multiple projects at one time(ideally without involving a company’s home country banks, thereby reducing cost) • After award of a project to the company, the other facilities required for completion of the project can be arranged • European companies in particular will benefit as many Europe based banks do not have significant credit lines from local banks • In addition to the above, Concordia can also provide related supporting services, such as assisting companies in establishing their local office and identifying sponsors or partners Concordia Capital, an experienced partner

Key Project Finance Related Products Pre-award Post-award • Pricing considerations: • Risk from country of origin • First timer positioning • Qatari lending rate • Market demand for funding • Funded vs. unfunded considerations • Comments • Certain products were up to recently often supported by an international bank to bank guarantee • As this is not feasible in the current market conditions, the solution is often to obtain a direct line from a local bank

Disclaimer THANK YOU FOR YOUR ATTENTION

Disclaimer This document contains confidential information and is intended only for the person this document is directly sent, presented or given to by Concordia Capital LLC. This document is provided for informational purposes only. Concordia Capital LLC is authorized by the QFC Regulatory Authority - License Number 000129. Registered address: Suite 703, QFC Tower 1 PO Box 28777 West Bay, Doha, Qatar Concordia Capital LLC has implemented a formal complaint handling process. This process is managed by the Head of Compliance & Legal who can be contacted on +974 4470 2030 or at: dneill@concordia-capital.com http://www.concordia-capital.com/

Qatar Infrastructure Projects Opportunities & Challenges for Italian Companies