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Investment insurance: ONDD’s cover possibilities and country policy

Investment insurance: ONDD’s cover possibilities and country policy. Opportunities for companies to engage in public private partnerships (PPPs) in Southeast Europe and the CIS Brussels, June 27 th , 2007 Lieven Dupon & Christoph Witte, ONDD. INVESTOR LOCAL COMPANY BANKS.

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Investment insurance: ONDD’s cover possibilities and country policy

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  1. Investment insurance: ONDD’s cover possibilities and country policy Opportunities for companies to engage in public private partnerships (PPPs) in Southeast Europe and the CIS Brussels, June 27th, 2007 Lieven Dupon & Christoph Witte, ONDD

  2. INVESTOR LOCAL COMPANY • BANKS equity shareholders loans bank loans L. Dupon & C. Witte

  3. INSURANCE COVER • ► Expropriation / government action • ► War • ► Transfer • SCOPE OF COVER • ► Equity: net book value + profits • ► Loans: principal + interests L. Dupon & C. Witte

  4. POSSIBLE ISSUES • ► Partner risk: • not covered, but what if your JV partner is a government entity? • ► Valuation: • what if the book value does not reflect the acquisition/market value of the local company? L. Dupon & C. Witte

  5. The global picture :- investment - related exports for capex - sales in the domestic market investment INVESTOR LOCAL COMPANY EXPORTERS DOMESTIC MARKET exports incl. export credits sales L. Dupon & C. Witte

  6. INSURANCE SOLUTIONS FOR : • ► the investor : equity/debt political risk cover • ► the exporters : export credit insurance (suppliers or buyers credit) providing comprehensive cover (political + commercial risks) • ► the local company : multi-buyer insurance policy in respect of sales on the domestic market L. Dupon & C. Witte

  7. Evaluating political risks: methodology War risk • War risk External conflict Political violence Internal conflict Socio-economic conflict Racial and ethnic tensions Civil war Terrorism Civil disorder L. Dupon & C. Witte

  8. Evaluating political risks: methodology (2) • Risk of expropriation • and government action Government risk Expropriation and contract repudiation Deficient legal system Negative attitude change Importance of foreign investment Quality and enforcement of laws Bilateral investment agreement Religious tensions War risk L. Dupon & C. Witte

  9. Evaluating political risks: methodology (3) • Transfer risk: classification based on the country’s • - external debt burden • - external liquidity • - growth potential • - policy performance • - vulnerability to external shocks • - political situation • Result: classification on a scale from 1 (lowest risk) to 7 L. Dupon & C. Witte

  10. Evaluating political risks: CIS classifications L. Dupon & C. Witte

  11. Evaluating political risks: SEE classifications L. Dupon & C. Witte

  12. Conclusion • Seize the opportunity… • …but manage the risks! • ONDD is there to support you. • www.ondd.be • Lieven Dupon Christoph Witte • Tel. +32 2 788 8768 Tel. +32 2 788 8746 • l.dupon@ondd.be c.witte@ondd.be L. Dupon & C. Witte

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