Ireland Infrastructure Briefing i n association with Osborne Clarke & Inspiratia Investment Opportunities: The N e

1. Ireland Infrastructure Briefing in association with Osborne Clarke & Inspiratia Investment Opportunities: The Next Wave of PPP Projects 10th September 2013

2. Introduction and Background

3. Track Record in Ireland of successful PPPs • Historic • 9 major inter-urban motorways/by-passes • 5 education PPPs, including 15 schools • International Convention Centre • Major criminal courts complex • Motorway Services Stations contract • And recently…. • N11 roads contract (April 2013) and Schools Bundle 3 (November 2012) • A further roads contract is scheduled to close by end 2013

4. Investment Partners in our PPPs to date

5. Investment Partners in our PPPs to date

6. Irish Government Stimulus Package and PPP Programme: Phase 1 (announced in July 2012)Appendix 1: Stimulus Package PPP ProjectsAppendix 2: Ireland Regaining Creditworthiness

7. €1.4 billion Phase 1 PPP Programme Education • 12 Schools to be delivered in 2 bundles • A single prequalification procedure with access to 2 lots of 6 schools • OJEU notice published for both bundles in June 2013. PQQ submissions received in July 2013 • Authority to secure Full Planning Permission based on Specimen Designs • Grangegorman/DIT Campus: 2 Quadrangles – expected to be procured as a single project - PIN published August 2013, OJEU expected early October 2013 Health • Primary Care Centres: circa 15 sites • Single-supplier national framework • Authority to secure Full Planning Permission based on Specimen Designs

8. €1.4 billion Phase 1 PPP Programme Justice • 3 Divisional Garda HQs : single contract expected • 7 Courthouse developments: single contract expected • Authority to secure Planning Permission based on Specimen Designs Transport • 2 new road procurements have commenced in 2013 (by National Roads Authority, with NDFA as financial advisor) • N25 New Ross Bypass; OJEU notice published in March 2013. Shortlisted consortia announced in August 2013 • M11 Gorey to Enniscorthy; OJEU notice published in July 2013 • N17 N18 Gort to Tuam scheme forecast to reach financial close in Q4 2013 • All PPPs so as to be “off balance sheet” in accordance with EuroStat rules • Standard availability based payment mechanism proposed for all schemes

9. Market consultation • Sponsors, equity • Debt Funders • Contractors/FM • Professional service providers

10. Issues and concerns • Pipeline • Deal size • Sovereign credit rating • Availability of funding • Previous project cancellations • Process – cost and duration

11. Meeting the challenges

12. Potential debt funding sources identified • European Investment Bank • Council of Europe Development Bank • National Pension Reserve Fund • To be re-orientated as Ireland Strategic Investment Fund (ISIF), with €6.4 billion discretionary portfolio available for commercial investment in Ireland (including PPPs) • Required legislative changes (in draft form) approved by Government, to be signed into law later this year • Domestic banks • Other Private: domestic (e.g. pension funds) and foreign (e.g. banks, pension funds, insurers) • Part of the proceeds realised from sale of “State assets” is available to fund project elements that require up-front exchequer spending.

13. Potential Funding for the Programme

14. Initiatives to reduce bid time and cost • Overall objective to reduce bid costs for private sector partners by 50% • Development of specimen/exemplar designs for repeat building types • Schools, Primary care centres • Target reduction of procurement schedule to between 15 mths (schools) and 18 mths (from OJEU Notice to financial close/contract award) • Publication in advance of indicative capital budget • Reduced submissions and no draft tender submission stage • Expect to continue to use Negotiated Procedure Policy decision agreed by Government in December 2012 • Reimbursement of part-bid costs for bidders/PT in event of PPP project cancellation • Reimbursement of part-bid costs to unsuccessful bidders (with a compliant bid)

15. Authority Term Sheet Already in place for roads Negotiated Procedure (envisaged for all schemes) 3 months Pre-Qualify & Shortlist Tenderers Invitation to Negotiate 5 - 8 months Authority Secures Planning Conclude Negotiation Submit Tenders 2 months Appoint Preferred Tenderer Debt Funding Sourced 5 months Contract Award

16. Other initiatives • Increased “Self-declaration” regime for pre-qualification stages • PA: Remove requirement for Authority Bond • PA: Reduce/remove “Change-in-Law” provisions (in line with PF2) • PA: Review insurance provisions (in line with PF2) BUT • Expect to keep “soft FM” services with private sector • Areas for innovation: increased focus on • energy use and performance of buildings; and • Lifecycle material/equipment decisions as part of the technical/quality evaluation

17. Indicative schedule (subject to market conditions) PQQ PQQ

18. Appendix 1 Stimulus Package PPP Projects

19. Education – PPP Schools • 2 PPP contract bundles expected of 6 schools each • OJEU notice published for both bundles in June 2013. PQQ submissions received in July 2013 • Continuation of successful PPP programme • 15 schools completed; FC on 8 further schools in Nov ‘12 • Standardised PPP contract in place • Standard availability-based payment mechanism • NDFA to develop specimen designs with full planning permission • Technical adviser appointed Kildare Town: a post-primary school for 1,000 pupils

20. Demographics driving need for places 45,000 additional Primary school places by 2018

21. Education – New campus, Dublin • Development is part of the consolidation of Dublin Institute of Technology (“DIT”) onto a new campus • 57,000 m² of teaching space in two major buildings • Expected to be procured as a single PPP project • Standard availability-based payment mechanism • Capex estimated circa €200m • Site in central Dublin has special planning status to facilitate development • First planning applications lodged (site infrastructure) • Technical advisor appointed • www.ggda.ie

22. Grangegorman DIT Campus Healthcare facility: near completion Central Quad East Quad

23. Health – Primary Care Centres • Circa 15 sites to be developed • Single supplier national framework-type structure • Does not involve GP or healthcare related services • HSE/NDFA to procure planning permission • Common template (specimen) design • Availability-based payments • Potential Phase 2 developments

24. Justice – Garda (Police) Regional HQs • 3 locations identified • Dublin, Galway, Wexford • Total capex estimated circa €65m - €75m • Special planning consent regime • Standard availability-based payment mechanism • Single contract expected Dublin, Kevin Street Site

25. Justice - Courthouses • 7 locations identified • Cork, Drogheda, Letterkenny, Limerick, Mullingar, Wexford and Waterford • Single contract expected • Total capex estimated circa €120m • Will follow special planning consent regime • Refurbishment/development of existing historical structures a feature of some sites • Standard availability-based payment mechanism Wexford Court House - Schematic Development

26. Second PPP Roads Programme • 2 new road procurements to commence in 2013 • N25 New Ross Bypass: • OJEU notice published in March 2013 • PQQ submissions received in June 2013 with shortlisted consortia announced in August 2013 • 14.6km dual carriageway, 1.2km of single carriageway including an extrados bridge of c. 900m • M11 Gorey - Enniscorthy: - OJEU notice published in July 2013 - 28 km new build motorway • Standard availability-based payment mechanism

27. Appendix 2Ireland: Regaining Creditworthiness

28. Ireland continues its macro/fiscal recovery in 2013 • Government deficit of 7.5% of GDP in 2012 means target was beaten by a wide margin again; this time full percentage point below EU (EDP) target • Second year of outperformance, following deficit 1.5pp of GDP lower in 2011 • Fiscal data for first half of 2013 point to further progress; Revenue slightly better-than-expectations and expenditure control is quite tight • EDP target of 7.5% of GDP looks readily achievable at this stage • Second consecutive year of real and nominal GDP growth in 2012 • Export growth remained resilient in 2012, despite weak external demand • Domestic demand bottoming over last nine months, ending five-year drag • Unemployment rate drops from high of 15.1% to 13.7% as of latest data • Ireland’s GDP growth expected to be among highest in euro area for 2013/14 • Banking-related contingent liabilities for the State reduced sharply • Pillar bank deleveraging almost complete: haircuts smaller-than-feared • State has reformed insolvency laws to deal with mortgage debt overhang • Ireland's main contingent liability being reduced: NAMA is well on track to repay €7.5bn of its senior bonds by end-2013 (repaid €6.25bn thus far) • Ending of ELG scheme for new liabilities after 28th March 2013 marks significant step towards banking system normalisation; ECB reliance now only ~20% of GDP

29. NTMA working plan to normalise market access in 2013 is on track • NTMA issued a new 10yr benchmark Treasury Bond in March 2013 • Sold €5bn of 2023 bond at 4.15% through a syndicate of six primary dealers; first 10yr issuance since January 2010 (well below previous yield of 5.09%) • Broad investor interest: over 400 investors submitted bids, including fund managers, pension funds, banks and insurance companies • 82 per cent by overseas investors; mainly from the U.K. (25%), Germany (12%), the Nordic region (12%), France (11%) and U.S. (7%) • NTMA also issued conventional bond via syndication in January 2013 • Sold €2.5bn of 2017 bond at 3.32% through syndicate of five primary dealers: the first such syndicated deal for three years • Investor spread was broad-based and skewed towards real money accounts across the UK, euro area and US • This followed the initial return to the Treasury Bill and bond market in 2012 • Next steps towards sustainable market re-entry in early 2014 • Continue regular schedule of Treasury Bill auctions – rate fell to 0.2% or lower over 5th–11th auctions (Jan-Jul 2013) from 1.8% at first auction (July 2012) • Continue to engage with investors on a regular basis: the NTMA conducted two non-deal road shows each year during both 2011 and 2012 • Possibility of MLT bond auction(s) in Q4 2013 after Budget 2014

30. Irish bond market recovery continues in 2013 (yld: %) Source: Bloomberg (weekly data)

31. Foreign ownership of marketable bonds is high Source: Central Bank of Ireland * The Mar-2013 holdings are adjusted here for the recent IBRC Promissory Note repayment (non-cash settlement) which resulted in €25bn of long-dated Government bonds being issued to the Central Bank of Ireland on liquidation of IBRC. This transaction results in a large increase in the share of resident holdings.

32. Total funding requirement declining steadily (€bn) • Funding requirement substantially improved since Budget 2013 (Dec. 2012) following sale of BOI CoCos and Irish Life. Restructuring of IBRC Promissory Note and extension of EFSF/EFSM maturities also of significant benefit • Cumulative NTMA Funding Requirement for 2014-15 now c.€11bn lower than at Budget 2013 • End-June cash and other financial assets of €30.6bn provide a considerable funding buffer for future years • EFSF/EFSM maturity extension and banking-related deals meant that 2014-15 funding requirement was dramatically reduced; NTMA has already pre-funded that lower 2014 requirement (shaded) via its 2012 and 2013 market forays Source: NTMA; Department of Finance • 1. “Est. Funding Requirement” includes the EBR, maturing Government bonds and EU/IMF Programme loans. • 2. EFSF loans have been extended by a weighted average 7 years . EFSM loans are also subject to a 7 year extension. It is not expected that Ireland will have to refinance any of its EFSM loans before 2027. A €5bn EFSM loan originally due to mature in 2015 is therefore no longer part of the “Latest Est. Funding Requirement” in 2015. • .

33. Exports continue to drive recovery as domestic drag lessens (annual real GDP growth contributions, p.p.) Sources: NTMA, CSO and Department of Finance (SPU April, 2013)

34. Ireland’s balance of payments current account surplus reflects large-scale rebalancing of economy (% GDP) • Highest quarterly surplus on record in Q1 2013 (5.6% of GDP), but may be somewhat flattered by record net factor inflows Source: CSO

35. Ireland’s competitive position vastly different to the other non-core countries Current Account Balance (% GDP) Source: DataStream

36. Ireland is far more open than other non-cores Source: Eurostat Note: Based on 2012 data