Promising environment Crossing into new markets The structureel finance team has taken the familiar sale/lease-back system and applied it in a new deal to a strategie new market - environmental protection. This complex and potentially trend-setting deal was set up by a two-man structured finance team, Jos Schreurs (left) and Wilfried Mulder (right), and designed in close cooperation with the Dutch Environment Ministry and the Waterschapsbank - the house bank for Holland's 88 independent water boards. These boards have been Dutch institutions for centuries. They have looked after the essential task of managing water levels and keeping the North Sea at bay. More recently, the boards have taken on more prosaic but equally necessary responsibilities such as waste management. The innovative lease-back deal makes use of the so-called Vamil tax incentive aimed at stimulating the construction of environmentally friendly projects. 'These projects tend to be quite costly and without such incentives many important investments would never be made,' remarks Schreurs. Under the Vamil program, green schemes become immediately eligible for depreciation; thus, at a marginal tax rate of 35 per cent, the NLG 100 million deal will yield a NLG 35 million fiscal benefit. Needless to say, Rabobank will still pay tax on income from the water authorities' lease. But this burden can be spread over the next ten years, while the depreciation benefit takes effect at once. The result is tantamount to an interest-free loan from the Dutch government, the benefits of which are shared among all the parties concerned. In effect, the 'green sale/lease-back' succeeds in pairing the water authority's highly crucial role in the history of Dutch water management with creative engineering on a more contemporary, financial plane. Looking ahead it seems clear that green investments by the water authorities will accelerate. There are proposals to expand the Environment Ministry's special tax facility from NLG 850 million to NLG 1 billion for 1996, and the structured finance team is cautiously optimistic that it can capture a substantial proportion of the green deals on the way. Cross-border leasing is a highly specialized and ferociously competitive market. A dedicated team of four people within structured finance pursues cross-border lease deals in a rapidly changing market. 'The customarily favoured assets were aircraft,' says the team's Erica van Ooijen. 'They are movable, easy to identify and quite valuable, all of which are conditions for setting up these complex long-term deals.' What's more, cross-border leasing deals were traditionally assembled by a small handful of 'packagers', like Citibank, who acted as the sole intermediaries between the US investor and a European lessee. Because of its starting point, financing on this market was dominated by the traditional aircraft banks which included ABN, Amro (still independent at that time,) plus NatWest and Barclays of the UK. But the market has developed and the asset base has steadily widened to include other big ticket assets such as rolling stock, paper mills, power plants and even large industrial facilities. Rabobank is determined to carve out a role for itself in the cross-border lease market in order to build its market profile and buy entry to the top 100 corporates. The bank recently teamed up with a technical adviser and is assuming a more active role in directly structuring deals for the European lessees. The Rabobank leasing team - which includes Ronald Dirksen, Hem Mulders, and Wim Roozenboom - has targeted Holland, Belgium, France and Spain as its priority markets. 'A packager's main interest is to satisfy his or her cliënt, i.e. the US investor,' says Dirksen. 'We feel we can get a better deal for our European lessees than if they accepted what was offered by the packager alone. We can not only help structure the deals, but we're also better placed to advise lessees on cross-border leasing opportunities in general.' Technically, for foreign investors, cross border leasing is a vehicle for tax management and long-term investment. A US bank might acquire title to some big capital asset in Europe under terms structured to produce a US tax advantage. For the user of the equipment, or lessee, this can also result in attractive financing, or a top-up on existing financing. The investor shares the benefit with the lessee. Rabobank was recently involved in a so- called US Pickle lease involving USD 157 million worth of trams connected with De Lijn, the Flemish Public Transport Company. As the current US market now stands, benefits to the lessee, measured as a percentage over equipment cost, can amount to 5 to 8 percent net of cost. Of course, Rabobank is ready to assume either roles: to function either as a traditional financier or as an architect of deals. 'It takes a long time to set up a mandate,' remarks Mulders. The only way you can keep your finger on its pulse is to constantly compete for every deal.' The results? Over the past six months, Rabobank has won the mandate to structure one deal, to act as financier for two more, and is now fighting for another three. F.l.t.r. Hem Mulders, Martba van den Berg, Ronald Dirksen (sitting) and Erika van Ooijen (sitting).

Rabobank Bronnenarchief

blad 'What's news' (EN) | 1996 | | pagina 17