Project Example

Equity investment
Example: Equity participation in Indian airport

Customer/Background

Bangalore is situated in the federal state of Karnataka and, with approximately 8 million inhabitants, is the fourth largest city in India. As one of the most prominent IT locations in the country, the city will acquire great economic advantage in the form of a direct international air link thanks to the new airport. More than nine million passengers are expected to use the new facility in the first year of operation.

The project

Budgetary pressures in emerging markets are intense. Although privatization is still in its infancy, the Indian Government is counting on private sector investors to finance many of its future infrastructure projects. Bangalore provides a model for private-sector involvement.
Bangalore International Airport Ltd was founded as a public-private partnership and is owner and operator of the New Bangalore International

• Private investors own 74% of the equity.
  Siemens Project Ventures (40%), Larsen & Toubro Ltd. (17%), Unique Zurich Airport AG (17%)
• State investors own 26%:
  The Government of Karnataka (13%) and the Government of India (13%)
  The total project volume is $ 500 Mio.

Siemens I&S and Siemens Ltd. India are sharing the work involved in project management, engineering and erection as well as in commissioning for the new airport. The order is being handled on the basis of a "build-own-operate" model. According to this model, Siemens Project Ventures GmbH will be a main investor in BIAL and, at a later time, will recover its investment by participating in the profits gained from operation of the airport.

Customer benefits

• Realization of an infrastructure project with private financing and international operational expertise
• Off-balance financing for infrastructure
• Transfer of construction, operation and traffic risk to third party

Quotation
Wolfgang Bischoff, managing director of Siemens Private Ventures:

“The financial close is an extremely important milestone in the realization of this major project. We have been working on the development of Bangalore airport since 1999. We are very happy that the financing for this project has finally been secured and that we were able to start building the airport. We are confident that the financing for the Bangalore airport will serve as a model for other public-private partnerships in India.”

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