For French, please click: İpek Ilıcak Kayaalp, Chairperson de Rönesans, a été mise en avant dans PFI
İpek Ilıcak Kayaalp, Chairperson of Rönesans, was featured in PFI
Rönesans Holding leads Turkish investments through strategic financing and international partnerships.Despite the challenging conditions and consequences of global and local circumstances including the pandemic and inflation in recent years in Turkey, Ronesans has been closing numerous project finance transactions via a whole range of financing models.
The approach taken to project financing has included conventional project financing from domestic or international banks, multinational financial institutions and export credit agencies.
Project financing is a crucial method to enable funding of our large-scale projects based on the projected revenues from the operation of the facility, rather than the general assets or the credit of the sponsors with long-term maturity. As an investor, Ronesans has advanced knowledge and financial strength to finance its new investment projects in the fields of real estate, infrastructure including healthcare and transportation, renewable energy, petrochemical and other sectors.
When it comes to new investments, in addition to conventional project financing ECAs could also offer favourable interest rates, long tenor and other advantages. That’s why Ronesans is currently aiming to expand the ECA financing with the benefit of skills and experience to reach longer tenor and lower costs in these investments.
In the 286km Mersin–Adana–Osmaniye–Gaziantep high standard railway project owned by General Directorate of Turkish State Railways, Ronesans secured a significant €781m in financing, as its successful implementation of the engineering, procurement, construction and financing (EPC-E) model, under the coverage of the British export credit agency UKEF, Austrian export credit agency OeKB and Italian export credit agency SACE. This is enabling a swifter completion of the construction elements of the project that is now underway.
In addition, Ronesans is focused on adding solar and wind power plants to its hydropower portfolio through its partnership with TotalEnergies in Ronesans Enerji. It closed a US$165m financing deal for the RERA-wind power plants with an export credit guarantee from the Federal Republic of Germany.
There are plans to finance the PPP model-motorway project under a project finance structure with the European Bank for Reconstruction and Development, the Asian Infrastructure Investment Bank, Dutch export credit agency Atradius, Swiss export credit agency SERV and commercial banks.
Besides these projects, the US International Development Finance Corp, will provide US$550m financing, while the rest of the funding will come from the Spanish export credit agency CESCE to build a petrochemical plant in the Ceyhan industrial zone on the country’s Mediterranean coast.
Accordingly, Ronesans is extremely capable to work with these financial institutions to build up robust structures across specific investment projects which have their own dynamics, terms and conditions and satisfy their high ESG standards; hence, the allocations and mitigants might differ such as debt-to-equity ratio with a range between 80:20 and 65:35.
Balance sheet
The company’s balance sheet funding differs according to the need, the relevant company and the territory, but there are some strict guidelines that Ronesans follows while shaping any of the balance sheets.Ronesans always prefers to team up with international blue chips for new investment opportunities. This provides the opportunity to create synergies, benefit from the partners’ experience in relevant fields and decrease the equity commitment needs of Ronesans Holding. The long-lasting partnership with GIC for the real estate business and Meridiam and Sojitz for healthcare are the best practices of this.
In the last couple of years, Ronesans further developed its international partnership network thanks to the deals executed with TotalEnergies, Sonatrach, Stolthaven and Samsung within renewable energy, petrochemicals, terminal operating and infrastructure. Lastly, the IFC, the member of World Bank Group, has held a minority stake at Ronesans Holding level since 2016 which enabled the company to grow the business in new fields and educated the organisation in terms of corporate governance in light of the IFC’s guidelines.
As for the funding side, Ronesans always collaborates with IFIs and local banks as the first option for any financing need. When it comes to a structured deal like project finance, corporate finance and so on, it collaborates with IFIs and ECAs like EBRD, FMO, DFC, AIIB, UKEF, OeKB, SACE, Euler Hermes, SERV and Atradius. For shorter-term facilities or non-cash products, top-tier local banks in every territory always offer us tailor-made solutions.
Debt capital market has also been used in the past, though currently we are not active there. In the past, we have used the local DCM market for mid-size bond issuance at the holding level and reached the international DCM market for the first time in 2018 for a five-year US$300m Eurobond issuance for RGY, which was executed successfully and repaid by 2023.
Upcoming deals
In 2018 Ronesans decided to expand into the petrochemical industry and signed a partnership agreement with the Algerian national oil company Sonatrach. The first step was taken in building a PDH/PP facility in Adana-Ceyhan, with Ronesans and Sonatrach as 66% and 34% shareholders, respectively.The facility, which will be implemented in Ceyhan using environmentally friendly technologies, will produce 472.5 thousand tons of polypropylene annually and will contribute a positive US$250m to Turkey's foreign trade balance every year. The total investment is approximately US$1.65bn. Spanish ECA CESCE covered lenders and DFC, from the US, will be financing US$1.1bn of the total investment. Financial close is expected in the last quarter of 2024.
In addition to PDH/PP investment, we agreed with Norwegian company Stolt Nielsen, to construct a liquid cargo terminal and storage facility of US$210m, which is the first phase of the port investment, and will be made through a 67%–33% partnership. This investment will mostly be financed through Cesce Covered Lenders. The construction of the facility is planned to start in the last quarter of 2024 and be operational by the end of 2027, with a total construction period of 38 months.
Ronesans is at an advanced stage of financial closing for a strategic motorway project in Turkey, together with Samsung C&T as SPV partner. The Nakkas Basaksehir motorway project is the last and essential section of the Northern Marmara Highway Project, including the Third Bosphorus Bridge Project, which alleviates intense traffic on the Trans-Europe Motorway and the Fatih Sultan Mehmet Bridge and provides significant time-saving.
The overall project capex is €1.4bn and the total financing to be raised through senior lenders is €1bn. The financing will be allocated entirely from IFIs, EBRD, AIIB, IsDB, ICD, European ECAs, Atradius and SERV, and ICIEC covered commercial lenders. This will make the project the first one in the Turkish BOT Program which is wholly financed by international lenders. Financial closing is expected early in the last quarter of 2024, and the project is scheduled to be operational by December 2026.
Finally, Ronesans Holding plans to use its expertise in Turkish healthcare PPP projects to a broader scope of social infrastructure sectors including education, justice, healthcare, energy and infrastructure, reinforcing its market leading position with new investments in the hospital pipeline. The Kokshetau PPP hospital, selected as the pilot project in the healthcare PPP market by the Kazakhstan Government, is the first PPP hospital that Ronesans will invest in within the CIS region. The PPP model is expected to lead to further business opportunities for Ronesans Holding in Kazakhstan and the wider CIS region and diversify its regional business portfolio.
The project agreement for the Kokshetau PPP hospital was signed at the end of 2022. The scheme has a bed capacity of 630 in a 111.000m2 construction area. The target is to finalise financial closing in 2024. The capex of this project is €450m with €360m of that amount a loan. The lending group of financial institutions will include EBRD, AIIB, Proparco, DEG, ICD and commercial banks.
ICIEC fully covers the project through political risk insurance coverage for equity and non-honouring of sovereign financial obligation coverage with a 95% coverage ratio for the senior loan. After two years of construction, we will hand over the project to the local authorities. We will be responsible for the operational output of the hospital with a limited-service scope for five years.
Green targets
Ronesans Holding, in collaboration with TotalEnergies, has ambitious plans for its renewable energy business. In one of the largest transactions of 2023 in Turkey1, TotalEnergies acquired 50% of Ronesans Enerji, which has six operational HEPPs with a total installed capacity of 166MW and a development portfolio that includes wind and solar projects with a total installed capacity of 560MW.Over the next five years, the company plans to spend over US$2bn to expand its green energy portfolio and increase its installed capacity to 2GW. This aligns with Turkey's national energy plan, which aims to achieve a total renewable installed capacity of 91.2GW and a 47.3% share of total energy generation from renewable sources by the year 2030.
In partnership with TotalEnergies, Ronesans aims to increase its installed capacity to 2GW within the next five years. It has a well-designed plan in place to achieve this objective and plans to secure funding for three projects by COY 2024, with the financing to be finalised within the next two years. These projects comprise the YEKA WEPP project, which has a capacity of 189MW; a WEPP project with a capacity of 35MW in Izmir; and a WEPP and BESS project.
The YEKA WEPP project will be supported by an export credit guarantee from the Federal Republic of Germany, and Ronesans has completed the financial closing. The goal is to start full production of the power plant by the end of 2024. This is Ronesans Enerji’s first green finance project and marks its first financing agreement with an export credit guarantee from the Federal Republic of Germany as Ronesans Holding. This project is the first and most crucial step towards the growth plan in partnership with TotalEnergies, which began in October 2023. Upon completion, within approximately one year it will more than double our current installed capacity.
Ronesans Enerji continues to take various strategic steps to achieve its goals. In this context, it closely monitors not only greenfield investment opportunities but also opportunities for the acquisition of operational power plants.
In 2022, Ronesans Enerji won the YEKA 3 tender, which involved constructing wind farms with a total installed capacity of 189MW in Malatya, Çorum, and Sivas. The company is also working on hybrid solar projects with a combined capacity of 11MW, which will be integrated into existing hydroelectric power plants. In addition, Ronesans Enerji is collaborating with Ronesans Gayrimenkul to spearhead a wind project with a capacity of 35MW in Izmir. The company is developing WEPP and BESS projects with a total capacity of 308MW for wind energy production and 308MWh for battery energy storage systems in Kırsehir and Kırklareli.
The YEKA 3 wind farm project is currently the most advanced project in progress. Last year, Ronesans Enerji signed a contract with a German-based equipment provider to supply turbines. The minimum localisation rate required for this tender was 55%, and Ronesans was able to successfully achieve this rate.
The EPC contractor for this project will be Heitkamp Industrial Solutions, a group company of Ronesans Holding. As both our equipment provider and Heitkamp are German companies, we have collaborated with an export credit guarantee from the Federal Republic of Germany to secure an ECA loan for the project, and we signed the loan agreement for the project, where the total investment amount is expected to be $218m, excluding financing expenses.
Ronesans is currently working on numerous projects, and our aim is to predominantly rely on ECA facilities and limited or non-recourse project finance loans. It can be challenging to secure long-term project finance loans from Turkish banks, therefore we will also look into IFIs focused on developing green energy projects.
IPO strategy
Thanks to the strong experience and track record developed during the past 30 years, we believe it is now time for most of the Ronesans Holding companies, including the Holding itself, to further expand the business and share our future potential with small investors via public offerings.Last year, we decided to start with Ronesans Gayrimenkul Yatırım (RGY), the real estate arm of the Group and kicked off the process. RGY has been active for almost 20 years in the Turkish real estate market and the company has successfully positioned itself as the largest mall and office operator in the country. RGY began trading on the Borsa İstanbul Star Market in April 2024.
Following the public offering, a total of 2,454,271 investors, including 2,454,093 domestic individual investors, became partners in Ronesans Gayrimenkul Yatırım, with the public offering size reaching approximately TL4.5bn, and the public float rate reaching 10.08%.
In parallel, we have been working to secure new IPO opportunities. Although the team has not yet decided the next step, the healthcare and infrastructure arms of the Group are currently at the top of the list. The ultimate goal on this will be going public for Ronesans Holding itself but at this stage, it is more efficient to first begin with the major subsidiaries.
International growth
Ronesans is active in more than 30 countries with more than 30,000 employees worldwide. Other than Turkey, the Netherlands is the main hub for international operations where we are active via Ballast Nedam. According to the FY23 results, 35% of the consolidated revenues were generated via Ballast Nedam. We also have sizable construction contracts ongoing in CIS and MENA, including Turkmenistan, Uzbekistan, Kazakhstan. We are active in other European countries like Germany, Switzerland and the UK, albeit not at a level that we have in the Netherlands.Extending Ronesans Holding’s infrastructure capability as both contractor and investor that we gained in Turkey, especially in the healthcare field, to other countries will be the main catalyst for international expansion. A good example of this would be the Kokshetau Hospital in Kazakhstan, where we have been working for a number of years. We are now at the final stage of the development phase and planning to start the construction following the relevant financial closure this quarter. This is projected to be followed by similar projects in Kazakhstan, Uzbekistan and Serbia in the near future.
Source: https://www.pfie.com/story/4722953/ronesans-to-lead-turkish-investment-xczj7ltm2h