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15/03/2010 / SPECIAL REPORTS / NATURAL RESOURCES, INFRASTRUCTURE AND POWER
Natural Resources, Infrastructure and Power: Crédit Agricole CIB "Bank of the Year"
In April 2008, the Bank reorganised its project finance activity under "Natural Resources, Infrastructure and Power" in the Structured Finance department. At the end of 2009, Crédit Agricole CIB was named "Bank of the Year" by Project Finance International for the success of this business line.
Jean-François Grandchamp des Raux and Alain Fanaïe, Global Co-Heads of Natural Resources, Infrastructure and Power comment the title of "Bank of the Year" and deliver their vision on this activity.
Interview with Jean-François Grandchamp des Raux and Alain Fanaïe
Can you introduce Natural Resources, Infrastructure and Power activities?
Alain Fanaïe - Before the creation of the department in April 2008, we had three separate financing activities: Project Finance, Structured Commodity Finance and Reserve Based Lending (outside North America), which was a joint venture between Project Finance and Structured Commodity Finance. In addition to these financing activities there was a separate financial advisory business.
Although each activity was performing quite well, our ambition was to reach excellence and to provide a one stop shop to our clients. Consequently we reorganised our business model around three economic sectors:
- Natural Resources encompassing Structured Commodity Finance, Project Finance, Reserve Based Lending Houston and Reserve Based Lending rest of the world (now known as Upstream Oil & Gas Finance),
- Infrastructure - roads, ports, airports, PPPPublic-Private Partnership describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. …,
- Power - fossil and renewable energy.
This resulted in many synergies. I would like to underline three advantages. First, it created an exceptional integrated commercial and technical workforce for origination of transactions. Second, it led to enhanced market intelligence enabling us to capture the right business and monitor our risk management. Third, a substantial development of our dedicated advisory team was carried out to advise our clients on the bankability of their projects which require multi-source financings. The recent USD 20 billion Ichthys LNGLiquefied natural gas advisory mandate (Australia/Japan) together with Mizuho is a good illustration.
In 2009, you received many awards and were named “Bank of the Year” by Project Finance International. Can you explain the main reasons for this success?
Jean-François Grandchamp des Raux - First, we must say that we are proud of these results. They reward the consistency of our strategy through the years. Indeed, we ranked in the top five over the past several years (Project Finance International) and we are now achieving a market share of about 5% (Project Finance International).
Last year, we closed about 100 deals, 26 of which were awarded “Deal of the Year” titles. They concern various geographies and various sectors: we can be satisfied with this diversity.
As a result, Crédit Agricole CIB ranks 1st worldwide amongst banks active internationally (Project Finance International, Dealogic and Infrastructure Journal), with an outright n°1 positioning the Americas and in the EMEAEurope, the Middle East and Africa (Project Finance International). Crédit Agricole CIB is also the leading European bank in Asia (Project Finance International) for project finance. Another important distinction is Crédit Agricole CIB’s title of “Bank of the Year” for 2009 (Project Finance International).
These excellent results reward our business strategy, which has been in line with the Bank’s strategy and with the evolution of the market. Of course, a large part of this success can be attributed to our teams, which gather some of the best experts in project finance in the world. Finally, in 2009, the market offered favourable conditions and Crédit Agricole CIB was able to capture new opportunities.
Can you tell us a few words about your cross-selling policy with the other business lines of the Bank?
Alain Fanaïe - The first level of cross-selling is to offer the right and bespoke solution to our clients through mobilisation of all the business line resources. Our results and awards speak for themselves. The second level is to garner the Bank’s resources and expertise to cover the full range of products necessary for our clients to manage their interest rate and currency exposure, commodity price and access to the capital markets in conjunction with the relevant senior bankers and product lines.
Interest Rates Derivatives are very often embedded in our medium and long term transactions to stabilise the cash flow of the projects. This is the reason why it is the more traditional cross-selling in our activity, with a substantial increase over the last two years.
However, in terms of diversification, we note a significant development in the Oil & Gas sector in particular in three products. First, the cooperation with the Commodities teams has led to new achievements both in Houston and Paris. Secondly, with Debt & Credit Markets, we can mention two joint bookrunner roles in high yield deals secured out of Reserve Based Lending in Houston. Finally, with Equity Capital Markets, we can cite two joint bookrunner roles obtained out of Reserve Based Lending in Paris: with Maurel & Prom for a EUR 300 million convertible bond “OCEANE” and with Tullow for a USD 1.5 billion capital increase.
We are committed to reach new achievements in this area by leveraging our expertise and focussing on our strengths to deliver the right products to our clients.
How do you see the prospects of your activity?
Jean-François Grandchamp des Raux - Our underlying market caters to the basic needs for commodities and infrastructures throughout the world, which are growing in line with global economic development.
The excellence of our teams and our coherent strategy should allow us to increase our market share.
Throughout the past 18 months, our clients, both long-term clients and some more recent clients, have experienced at first hand Crédit Agricole CIB’s ability to support them in difficult times.
Actually, this is highlighted by the closing of GSM-R led by Vinci, which is the largest Public Private Partnership transaction in France to date (source: RFF press release). We helped carry this deal in the midst of the financial crisis and the bankruptcy of their main supplier.
For 2010, our goal is to gain and consolidate a position of “Bank of choice” with our clients. The development of our advisory platform, already well underway, forms part of this strategy to provide more value-added services to clients and to deliver a wider range of the Bank’s products.
Jean-François Grandchamp des Raux and Alain Fanaïe, Global Co-Heads of Natural Resources, Infrastructure and Power
