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OECD, 7th Meeting on Public-Private Partnerships - Raffaele DELLA CROCE

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This presentation by Raffaele DELLA CROCE was made at the 7th Meeting on Public-Private Partnerships held on 17-18 February 2014. Find more information at http://www.oecd.org/gov/budgeting/ppp.htm

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INSTRUMENTS AND INCENTIVES TO ATTRACT INSTITUTIONAL INVESTORS IN INFRASTRUCTURE 7th Annual Meeting of Senior PPP Officials February 17th 2014 Raffaele Della Croce Lead Manager, LTI Project, Financial Affairs Division - OECD raffaele.dellacroce@oecd.org
Institutional investors Landscape Inst Inv AUM have been growing to USD 83tr AUM in OECD countries Assets held by Institutional Investors in the OECD area, 1995-2012 Source: OECD 2
Pension Funds’ LTI: Survey Oct 2013 Large Pension Funds Survey 2013.. North America Ontario Municipal Employees’ Retirement System (OMERS) - Canada Canada Pension Plan Investment Board (CPPIB) - Canada Ontario Teachers Pension Plan (OTPP) – Canada Social Security Trust Fund –USA Calpers - USA OPERS- USA PRIM -USA Europe Zilverfonds –Belgium ATP – Denmark PFA –Denmark Pension Reserve Fund – France AGIRC-ARRCO –France National Pen Res Fund –Ireland Fonchim –Italy Cometa –Italy ABP -Holland PFZW - Holland PMT - Holland Governmenr Pension Fund Global –Norway Demographic Reserve Fund –Poland Social Security Stabilisation Fund – Portugal BPI – Portugal Social Security Reserve Fund –Spain Caja Madrid –Spain Endesa –Spain Fonditel –Spain Ap1-Ap6 –Sweden University Superann. Scheme (USS) -UK BT Pension Scheme - UK Asia - Australia &NZ Central & South America Sustainability Guarantee Fund –Argentina Banco do Brasil Employee Pension Fund (PREVI) - Brazil Pension Reserve Fund – Chile AFP Provida – Chile AFP Horizonte – Colombia Bancomer Afore – Mexico IMSS Reserve – Mexico AFP Horizonte –Peru Africa Nigeria Government Employees Pension fund of South Africa (GEPF) National Social Security Fund - China Goverment Pension Investment Fund – Japan Pension Fund Association - Japan National Pension fund – Korea AustralianSuper – Australia SunSuper - Australia Future Fund – Australia New Zealand Superannuation Fund – New Zealand ..Investors for more than US$9tr AUM spread 3 across regions
Pension funds Asset Allocation Average asset allocation of Large Pension Funds (LPFs) and Public Pension Reserve Funds (PPRFs), 2012 4
Investor Asset Allocation for Infrastructure 5
Different ways to access Infrastructure 6
Infrastructure Risk/Reward Profile 7
Barriers to Infrastructure Investment Problems with government support for infrastructure projects • • • • • Lack of political commitment over the long-term Lack of infrastructure project pipeline Fragmentation of the market among different levels of government Regulatory instability High bidding costs Lack of investor capability • • • • Lack of expertise in the infrastructure sector Problem of scale of pension funds Regulatory barriers Short-termism of investors Problems with investment conditions • Negative perception of the value of infrastructure investments Lack of transparency in the infrastructure sector Mis-alignment of interests between infrastructure funds and pension funds Shortage of data on infrastructure projects • • • Source OECD
OECD LONG TERM INVESTMENT PROJECT 9
OECD LTI Project What does long-term investment mean and why does it matter? • “Patient”,“Engaged”,“Productive” capital • LTI investors/LT assets • NB: Short Term not bad • OECD, APEC, G20 relevance 10
OECD LTI Project - Structure Deliverables Structure: Modules Data Collection on Institutional Investors Data Collection Infrastructure Investment Regulation Policy Analysis Governance Events Emerging Markets Financing OECD added value • • • • Institutional Investors expertise (Committees, IOPS) Data collection national level Other work from OECD Directorates/divisions (ENV, GOV, DEV etc..) Network of stakeholders (i.e. Institutional investors, Asset managers, Universities, Investors Group) 11
OECD LTI Project – 2012-3 Events Feb 2012 LAUNCH APEC – Indonesia August 2013 OECD/ Euromoney Infrastructure financing Summit 29 May 2013 G20/OECD LTI Roundtable Paris 28 May 2013 Launch Event Paris February 2012 Long-Term Investment Project OECD/APG/RiskLab LTI and Regulation Amsterdam Feb 2013 ADB/OECD /ICC Workshop on bankability of PPPs Feb 2013 2013 OECD Forum Paris May 2012 G20/OECD Green Growth Conference Paris May 2012 OECD/IOPS Private Pensions Global Forum Conference – Chile Oct 2012 12
Next Steps • Implementation of High Level Principles: priority areas for 2014 • Analysis of Government and Market Based Instruments and incentives for LTI • OECD LTI project research • Network of Investors www.oecd.org/finance/lti - OECD long-term investment project 13

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OECD, 7th Meeting on Public-Private Partnerships - Raffaele DELLA CROCE

  • 1. INSTRUMENTS AND INCENTIVES TO ATTRACT INSTITUTIONAL INVESTORS IN INFRASTRUCTURE 7th Annual Meeting of Senior PPP Officials February 17th 2014 Raffaele Della Croce Lead Manager, LTI Project, Financial Affairs Division - OECD raffaele.dellacroce@oecd.org
  • 2. Institutional investors Landscape Inst Inv AUM have been growing to USD 83tr AUM in OECD countries Assets held by Institutional Investors in the OECD area, 1995-2012 Source: OECD 2
  • 3. Pension Funds’ LTI: Survey Oct 2013 Large Pension Funds Survey 2013.. North America Ontario Municipal Employees’ Retirement System (OMERS) - Canada Canada Pension Plan Investment Board (CPPIB) - Canada Ontario Teachers Pension Plan (OTPP) – Canada Social Security Trust Fund –USA Calpers - USA OPERS- USA PRIM -USA Europe Zilverfonds –Belgium ATP – Denmark PFA –Denmark Pension Reserve Fund – France AGIRC-ARRCO –France National Pen Res Fund –Ireland Fonchim –Italy Cometa –Italy ABP -Holland PFZW - Holland PMT - Holland Governmenr Pension Fund Global –Norway Demographic Reserve Fund –Poland Social Security Stabilisation Fund – Portugal BPI – Portugal Social Security Reserve Fund –Spain Caja Madrid –Spain Endesa –Spain Fonditel –Spain Ap1-Ap6 –Sweden University Superann. Scheme (USS) -UK BT Pension Scheme - UK Asia - Australia &NZ Central & South America Sustainability Guarantee Fund –Argentina Banco do Brasil Employee Pension Fund (PREVI) - Brazil Pension Reserve Fund – Chile AFP Provida – Chile AFP Horizonte – Colombia Bancomer Afore – Mexico IMSS Reserve – Mexico AFP Horizonte –Peru Africa Nigeria Government Employees Pension fund of South Africa (GEPF) National Social Security Fund - China Goverment Pension Investment Fund – Japan Pension Fund Association - Japan National Pension fund – Korea AustralianSuper – Australia SunSuper - Australia Future Fund – Australia New Zealand Superannuation Fund – New Zealand ..Investors for more than US$9tr AUM spread 3 across regions
  • 4. Pension funds Asset Allocation Average asset allocation of Large Pension Funds (LPFs) and Public Pension Reserve Funds (PPRFs), 2012 4
  • 5. Investor Asset Allocation for Infrastructure 5
  • 6. Different ways to access Infrastructure 6
  • 8. Barriers to Infrastructure Investment Problems with government support for infrastructure projects • • • • • Lack of political commitment over the long-term Lack of infrastructure project pipeline Fragmentation of the market among different levels of government Regulatory instability High bidding costs Lack of investor capability • • • • Lack of expertise in the infrastructure sector Problem of scale of pension funds Regulatory barriers Short-termism of investors Problems with investment conditions • Negative perception of the value of infrastructure investments Lack of transparency in the infrastructure sector Mis-alignment of interests between infrastructure funds and pension funds Shortage of data on infrastructure projects • • • Source OECD
  • 10. OECD LTI Project What does long-term investment mean and why does it matter? • “Patient”,“Engaged”,“Productive” capital • LTI investors/LT assets • NB: Short Term not bad • OECD, APEC, G20 relevance 10
  • 11. OECD LTI Project - Structure Deliverables Structure: Modules Data Collection on Institutional Investors Data Collection Infrastructure Investment Regulation Policy Analysis Governance Events Emerging Markets Financing OECD added value • • • • Institutional Investors expertise (Committees, IOPS) Data collection national level Other work from OECD Directorates/divisions (ENV, GOV, DEV etc..) Network of stakeholders (i.e. Institutional investors, Asset managers, Universities, Investors Group) 11
  • 12. OECD LTI Project – 2012-3 Events Feb 2012 LAUNCH APEC – Indonesia August 2013 OECD/ Euromoney Infrastructure financing Summit 29 May 2013 G20/OECD LTI Roundtable Paris 28 May 2013 Launch Event Paris February 2012 Long-Term Investment Project OECD/APG/RiskLab LTI and Regulation Amsterdam Feb 2013 ADB/OECD /ICC Workshop on bankability of PPPs Feb 2013 2013 OECD Forum Paris May 2012 G20/OECD Green Growth Conference Paris May 2012 OECD/IOPS Private Pensions Global Forum Conference – Chile Oct 2012 12
  • 13. Next Steps • Implementation of High Level Principles: priority areas for 2014 • Analysis of Government and Market Based Instruments and incentives for LTI • OECD LTI project research • Network of Investors www.oecd.org/finance/lti - OECD long-term investment project 13