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DBS ramps up project finance deals on Asia infrastructure

Bank says local knowledge and strong regional connections give it an edge in advising on projects across sectors

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Mr Lim: "Our loans would usually be a small part of the overall financing given the scale of such projects but our advisory expertise and extensive network in Asia ... are where we add significant value."

Singapore

DBS Bank is beefing up its project finance team to get a share of Asia's huge infrastructure development needs.

From Beijing to Sydney, DBS project finance (PF) bankers can be found as Southeast Asia's largest bank hopes to play a key role in helping develop the region's infrastructure.

Developing Asia will need to invest US$26 trillion from 2016 to 2030, or US$1.7 trillion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change, according to the Asian Development Bank (ADB).

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Of the total climate-adjusted investment needs over 2016-2030, US$14.7 trillion will be for power and US$8.4 trillion for transport projects. Investments in telecommunications will reach US$2.3 trillion, with water and sanitation costs at US$800 billion over the period, said the ADB.

The Singapore bank's local knowledge and strong connections in this part of the world gives it an edge when it offers advice on projects across sectors. "That can be very re-assuring in the midst of the complexities that overseas infrastructure projects present," said Lim Wee Seng, DBS managing director and group head of project finance.

Projects that the bank is involved are in sectors such as solar, wind, hydro, geothermal and transportation, said Mr Lim, as he reveals the bank's ambitions for its PF business.

Some of its notable deals this year are in Indonesia. DBS was one of four bookrunners for the US$580 million green bond issue for Star Energy Geothermal Wayang Windu Ltd. It was also a joint lead manager and joint bookrunner for Paiton Energy's US$2 billion project bond.

In Beijing and Shanghai, DBS has infrastructure coverage bankers as well as project financing product specialists. "Headcount has grown steadily since 2016 to the current 14 bankers. This is just purely bankers focused on the infrastructure financing and advisory aspects of the B&R," said Mr Lim.

DBS is very focused on China's BRI or Belt and Road Initiative, he said. The bank's 14 bankers in China complements the 30 infrastructure and PF bankers in Singapore, he said.

"DBS industry and PF bankers in Singapore, Australia, Beijing and Seoul, coupled with our on-the-ground footprint and knowledge is a significant advantage," said Mr Lim.

Currently DBS has six advisory mandates to-date related to BRI in Asia, he said. The six deals are involved in industries such as energy, transportation and water.

The bank's BRI strategy has always been one focused on being an advisory partner to the Chinese including the Chinese commercial and policy banks as they embark overseas, said Mr Lim.

"We lend our expertise in the area of international style project finance and PPPs, especially in competitive bid situations which the Chinese are increasingly participating in," he said. PPP refers to public-private partnership where governments combine with the private sector to fund long- term infrastructure projects.

DBS doesn't just pursue a pure lending role, he said.

"Our loans would usually be a small part of the overall financing given the scale of such projects but our advisory expertise and extensive network in Asia which helps in matching local partners and navigating the local market terrain are where we add significant value," said Mr Lim.

In addition to the six BRI projects, the bank was also mandated this year on 13 renewable deals worth US$1.3 billion.

Winning a mandate means the bank is a lead arranger for the financing and also arranges the structure of the deal and facilitates and leads a group of investors in a syndicated loan.

These 13 deals relate to renewable energy sources such as solar, wind, hydro and geothermal. Some deals are pioneering. DBS scored in Taiwan's first offshore wind project.

Mr Lim noted that DBS has more than 40 branches in Taiwan giving it access to local funding.

"We were mandated lead arranger for the first offshore wind project in Taiwan and are currently executing on a few other renewable mandates due to branch network in the market which gives us access to the local currency, in addition to USD," he said.

And down under, over the last 12 to 18 months, just in the renewable space alone, DBS has carried out two wind-related deals in Australia.

Australia is an active PPP project finance and renewable market for our branch in Sydney, said Mr Lim.

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