Latin Finance - October 2008 - 33

infrastructure awards Steady Under Pressure WestLB Infrastructure House n Europe, it has not been the best of years for WestLB, the German landesbank, whose writedowns, losses and bailouts have caused consecutive waves of negative headlines over the past several months. In LatAm, however, the investment bank managed to keep its global woes at a distance, capitalizing on an historical focus on energy, infrastructure and project finance. WestLB churned through a long list of transactions – many of them innovative and trend-setting – to clinch this year’s LatinFinance award for Infrastructure House of the Year. The shop’s success in the region during the 12-month period through July is the fruit of the collective labors of a team that today looks much different than even a year ago. Veterans Moses Dodo, Carl Adams and Isaac Deutsch were politely shown the door during a global redesign that abolished the regional banking approach to in favor of a product-based organizational structure. While some WestLB officials claim the change was a way to strategically refocus the bank’s resources and reduce costs, others familiar with the institution suggest the new industry-oriented structure masks a pullback from riskier emerging markets, including LatAm. Big name departures can be destabilizing for an energy and infrastructure franchise like WestLB, which relies heavily on long term relationships and experience, in addition to a track record and sector expertise. Added to subprime related losses, rising costs of bank funding and a slew of decisions at home geared towards survival rather than concerted expansion, these can threaten a bank’s ability to stay competitive and maintain a meaningful presence in a region like LatAm. Senior officials maintain that WestLB is committed to LatAm and continues to fill some roles left vacant by the layoffs. In August, the bank hired Fuensanta Diaz Cobacho a US project finance managing I director at Santander, to be an MD in its Americas energy and infrastructure team. In LatAm, she will lead deals that might have formerly been led by Isaac Deutsch. Tom Murray, global head of energy and infrastructure at WestLB, says the bank has big plans for its new integrated energy and infrastructure business in the Americas, whose fastest growing business is LatAm. Compared to full year 2007, Murray says he expects total revenues for his global group to double by 2009, with fee revenue more than doubling and portfolio interest income rising by 25%. WestLB,” says Murray, referring to fee-based business and balance sheet deployment. “There’s a ton of opportunity down there and we haven’t exploited it yet.” Structuring in Risk WestLB’s lead role in a some of the marquee LatAm financings over the past year – like La Yesca in Mexico and Delba in Brazil – puts it a step ahead of competitors. A number of banks including Calyon, Société Générale, BNP Paribas, Santander, Merrill Lynch, ING, Scotia and BBVA, have made contributions to the advancement of project and infrastructure finance. But in most cases, they have excelled in a narrow universe, such as Chilean projects, Mexican tollroads or AES power plants. Some have taken the lead in groundbreaking deals like Farac, the Mexican tollroad financing, or Peru LNG, a complicated project that relied on hoop jumping on the financing and public relations fronts. But WestLB picked its shots carefully, focusing on Mexico and Brazil, both of which yielded diverse and continuous pipelines of new business. More importantly, WestLB innovated, taking calculated risks on behalf of its clients when more expensive and more obvious solutions were available. In the midst of a credit crunch, coming up with elegant, affordable solutions for borrowers in a region like LatAm – which has such a dire infrastructure and energy deficit – is a notable achievement. Leading the way into uncharted territory, including financing the first of potentially several deepwater platforms for Pemex in Mexico, or finding new, distant sources of equity for emerging local Brazilian platform builders in Brazil suggests WestLB has taken a view on market direction. “We try to find situations that are not plain vanilla where we can use our structuring capabilities to allow our clients to get the best possible financing,” says Murray. He adds that on a global basis, the goal is to limit use of the balance sheet so that WestLB holds around 10% of a deal and can distribute the remainder into the market. WestLB executives claim that their boutique, value-added approach differs from the typical investment banking model LatAm growth boost, says Murray “Latin America will be a big part of that growth,” says Murray, who says the shop’s North America business is more mature than LatAm. Today, WestLB has a balance sheet of roughly €9 billion for its energy business and €3 billion for infrastructure, with LatAm answering for some 15% of that. Fee revenue from the region corresponds to roughly 20% of the energy and infrastructure fee pool, and that is set to grow significantly in coming years, claim top officials, who decline to provide further specifics. The Americas answer for more than 50% of the bank’s global infrastructure and energy businesses, though LatAm’s contribution is understood to be still well below the US. “I see LatAm having the same possibilities as North America for October 2008 LATINFINANCE 33

Latin Finance - October 2008

Table of Contents for the Digital Edition of Latin Finance - October 2008