Canada-UKEF Partnership: Unlocking Global Clean Tech Opportunities

Wilson Pearce  
All right. Well, I think we will start at being 11 o’clock. I know we’ve got a number of other people joining the meeting. So thank you, first of all, for taking the time to join the meeting today. There’ll be some material that follows this meeting as well for people if you’re looking for follow-up material. So do your best to enjoy the session.
and engage knowing that we’ll provide you with some notes and follow-up information. So look, I think maybe we’ll start with a quick round of introductions and then I’ll talk a little bit about G2G and the UK Export Finance support. So I’m Wilson Pearce. I’m the Senior Director at CCC for Trade Strategy and Operations. And in that role,
One of the things I look at are strategic markets and the clean tech market is one of those, one of those markets. I’ll talk to that in more detail in a moment, but maybe Ozgur, I’ll give you a chance to introduce yourself and then I’ll swing back.

Ozgur Kutay  
Wilson, thank you very much. Good morning, everyone. And I’m so delighted to join this opportunity organized by CCC. I represent UK Export Finance, UK government’s export credit agency. I’m based in Toronto for the last year and a half. And we are
in business of supporting UK exports, primarily for the buyers of projects, for the buyers of UK goods and services who own the projects around the world. And we are going to go through how we can collaborate with Canadian exporters you know, in this presentation. And thank you, Wilson, back to you.

Wilson Pearce  
Super. All right, thanks, Ozgur. So yeah, so there we are. So CCC, why is CCC involved in the discussion at the moment? Let’s start with CCC’s overall mandate, which is we’re a crown corporation owned by the Government of Canada. Our mandate is to support trade policy.
and trade strategy, the Canadian trade policy and trade strategy, through supporting Canadian companies who are engaged in contracts generally with public sector buyers around the world.
Now, what does that bring to each of the two parties? For the foreign buyer, what that brings is an assurance in the form of a contract performance guarantee that CCC provides. So we actually become the prime contractor, let’s say it’s the government of Bulgaria.
You know, we become the prime to the government of Bulgaria. So the government of Bulgaria now sees themselves in a contract with the government of Canada. We immediately do a back-to-back to the commercial terms and the contract of the Canadian company that’s involved in that transaction. So we’re not involved in the technicalities.
We’re not involved in the commercials. We’re not involved in the day-to-day operation of the project. We’re simply providing a contract performance guarantee and then a contract management service over the life of that contract. And that contract management service is 1 where we kind of act like a referee. We manage.
the terms of the contract between the buyer and the seller to ensure that both parties are both meeting their obligations and the reverse of that are both getting the, you know, the terms and conditions that they negotiate in the contract. So.
We’ve typically been involved, you’ll probably know us best in the aerospace and defense sectors. That’s where we’re typically involved. We’ll often be involved in things like infrastructure as well. We started to look at the global market for clean energy and clean tech. And I’ll give you a couple of numbers as to why this is of interest.
both to us as a G2G mechanism, but much more broadly to Canadian exporters. If you…
If you look at the market for clean tech investments in the coming future, and by the way, I’m excluding solar and wind, because one other note I should make, because solar and wind tends to be intermittent, and our mandate is to look at supporting basically public utilities if it’s a
if it’s a public sector sale within that space, you’re really looking at base load solutions. So you’re looking at solutions that feel like geothermal, smart technologies, waste to energy, hydrogen and clean tech, you know, those kinds of solutions. So I’m already excluding some fairly big pieces of the market.
and some fairly big buyers. I’m also excluding China from any numbers that I offer here because we at the moment cannot engage in a contract with the state of China either. But over the next few years, this is a $3 trillion market. It’s one of the biggest markets out there. And if you knock
that down, if you scale that down to those sectors and what might be attractive and could be served out of Canada from Canadian companies based on our participation in the market at the moment globally, it’s still about an $8 billion market. And then if you go one step further, you say, well, okay, how many of those might CCC get involved in?
It’s probably about a $3 billion market. Because again, we would just be in that very small subset of transactions where public utilities looking for a larger scale base load solution. You know, we won’t be involved if you’re engaged in providing components
or you’re part of the supply chain to an end supplier who’s located with the utility and it’s more of a business-to-business transaction.
So even when you start slicing that world and getting smaller and smaller and smaller, it’s still a fairly attractive market, both for Canada at 8 billion, and then if it was G2G at about 3. So this is one of the reasons we’re looking at it, very much in line with the government’s approach and policy on trade diversification as well.
from both a regional and a sectoral standpoint. And then when we look at the world, you know, the global market for the clean tech technology, it’s divided relatively equally. There’s about a $650 million opportunity or $1,000,000
There’s 650 projects, sorry. So I’ve just described money. How does that turn into the number of opportunities, right? There’s about 650 projects in EMEA, Europe, Middle East and Africa, that are percolating out over the next three years that have been identified by various organizations at this stage.
And about, you know, 3/4 of them are in the smart technology space. The other ones are, you know, the smaller in number but larger in value, geothermal and waste energy and, you know, some of those power generation type solutions. Asia Pacific is roughly the same. There’s roughly 650 projects.
that are on deck over the next three to four years with a similar split. You know, 70 percent, 60 to 70 percent are in the smart technology space and the other ones are in waste energy and whatnot. And then when you get to Latin America and the Caribbean, you’ve probably got around 200 and some projects.
So, you know, none of this makes, you know, none of us makes any of us sort of step back and take a second guess at the market. These are all relatively appropriate for the markets that we’re looking at. The one issue that I would raise, again, just as a reminder, is we didn’t include China in the Asia-Pacific market.
And for those of you who are following all of this, I mean, China is half the market, both in terms of being a supplier and in terms of being a buyer. I mean, I’m being a bit extreme, but they’re a significant piece. So it overall looks like an area where Canadian companies could and should be getting more and more engaged internationally.
And Canada has a very good brand.
internationally. And as a result, as we looked at these regional markets, our thought was…
You know, one of the things that you often do is partner with a third party. Just a minute here.
As you partner with a third party, there are some really interesting opportunities with organizations like UKEF, which Ozgur will speak to, because as you’re selling into the public sector, there are a number of times where as a public sector buyer, there’s an eligibility for export credit agency financing.
which is a more attractive financing. It recognizes the nature of the buyer. It extends the terms. It provides you more attractive terms and also provides you with some additional security. So as a result, we negotiated an agreement in MOU with a UKEF almost a year ago now.
where we would partner and collaborate with each other in supporting Canadian exporters. And so I think it’s an opportunity because we’re simply a contracting mechanism, by the way. I spend most of my life telling people we don’t have money. It’s the export credit agencies that have the money. We are just managing the contract for you.
So as a result, and, you know, in ratio of the importance of the information, you’re going to be hearing a lot more from Ozgur than you will from me at this point in terms of how that works and how UK export finance operates and can support Canadian companies, interestingly enough, that have
other elements that are in their supply chain that reach back into the UK. So with that, I’ll pause because I think as we get through, we’ll probably have questions. So we’ll do that.

Ozgur Kutay  
On.
Wilson, thank you very much for the introduction, as well as, you know, the entry to the UKEF relationship, which is about a year old in terms of our formalizing the relationship for third country collaboration through a memorandum of understanding. Now,
This arrangement has quite a bit of synergies. One is, obviously, CCC is not a financing entity, as Wilson says, but deals with many governments around the world as a G2G organization. They, you know,
originate, they de-risk contracts, manage contracts, so that, you know, the buyers and ultimately exporters, financiers are, you know, in a smooth sort of a transition with the contract. We do a lot of work, and you’ll see in my presentation, we do a lot of work with many countries around the world.
I think about, if you look at our website, we might have country capacity for about 90 countries of the, you know, 180 or so around the world. We have representation in 20 plus of them, you will see. And then we work with sovereigns.
which is, in fact, majority of our business abroad is with sovereigns. That means central governments, federal governments, regional governments, municipalities, or state-owned enterprises. We work with companies, private sector companies, as well as with
project finance structures as well. Today, I’m going to try to walk you through what the UKEF offer is and how we can leverage this collaboration effort. So if, Georgia, if you could move to the next slide. We are a government department and we are the world’s first export credit agency. We were set up in 1919.
So, and been in business over a century and been known to be the most, I would say, one of the most innovative and flexible export credit agencies. And you will see why. And this is not me saying it. It’s confirmed by many industry sort of authorities.
the GTRs and TFXs of this world, as well as many of our clients, either borrowing clients or exporting clients.
We offer a sort of a commercial financing, so it’s not a grant or it’s not a subsidized financing. So we don’t offer equity solutions, it’s debt only. But, you know, we’re quite large in our capacity.
It’s just being doubled now at overall capacity to 160 billion. That’s UK pounds. And our current exposure is about 60, 65 billion. So we have a lot of room to grow. We have underwritten, not this.
prior financial year, which is just completed about 10 days ago. But the prior, the earlier financial year, we had about 14 and a half billion pounds of new business. I should say a good 8 and a half of that came from one large transaction, which is
in defence industry, which is to Poland, government of Poland. But even if you normalize that, you know, this year, for instance, we’re expecting, again, close to double digit sort of new business in billions of pounds. Next slide, please.
Please?
So what is, first of all, we work with ECSF, different ways of working with their exporters and their ultimate clients, the buyers. Some work directly. EDC, for instance, in Canada has its own balance sheet and can lend.
its own money. Our model is slightly different. It’s more, I think, go to model around the world. If you look at across all the agencies, we provide you back state back guarantees essentially. So it’s 100% guarantee that is carrying the full faith and credit of the UK government. Since we’re a government department, when we sign that,
we sign on behalf of the UK government. So for those of you in banking, there is no basis risk there. That project or that borrower is getting the UK government’s full support, 100%, up to 85% of the contract. And that’s an OECD regulation. I should mention we are regulated by our own government through our treasury.

Wilson Pearce  
Oh.

Ozgur Kutay  
but also OECD as a, you know, as a common governance platform among the OECD member export credit agencies. In order to qualify, we would require a minimum 20% of the contract value or the financing
value should be in UK goods and services.
What we mean by UK goods and services. UK goods are straightforward, right? They are obviously equipment either made in the UK or modified in the UK or sort of altered and value added in the UK.
and are eligible to get a made in UK certificate. They don’t have to get it, but they are eligible. It could be partial because in today’s world, the tech solutions are very, very sophisticated. It’s not making one simple widget, but rather putting together different supply chains. So you could have a…
a signalization system in a sort of a high-speed train for 53% UK mate, right? So that is possible for us. The other important aspect, which is, I wouldn’t call it unique, but quite uncommon and very valuable, is that we
also use UK-based services as exports. So services exports, which is an integral part of UK economy, about a third to 40% of UK exports are in services. And these are professional services, engineering, consultancy, design sort of services. We cover those as UK content.
An interesting area may be relevant in some of the clean tech. We also look into UK hold, UK held IP, so that is patents, licenses, copyrights, trademarks as exports, so we can monetize them into the into the transaction.
On.
So to summarize these three points, it’s 100% guarantees, unconditional guarantees, no insurance policies or stuff, a minimum 20% eligibility requirements, and it’s possible to reach that through a combination of goods and services or intangibles.
to be able to qualify for the transaction. I mentioned that, you know, we are about 550 people. Most of us are based in the UK, in London. We have a network in 22, 23 countries. North America,
locations run out of Toronto. So I’ve been here for about a year and a half. Prior to that, I was in Istanbul and about 6 1/2 years. So I’ve been with UK for over 8 years. Prior to that, I did some corporate investment banking in different markets.
In terms of our global footprint in the Americas portion, we’re about 5 strong. So there’s people that are covering Caribbean and Latin America, in particular Brazil and Colombia, but they cover regions. There are about 6
in our case, including China, but non-China, five people in Asia. And then we have six in Africa, both North Africa and Sub-Saharan Africa, and four would be Europe and Central Asia. So that’s how we are equipped. We work with a number of currencies, normally

Wilson Pearce 
Mhm.
Mm-hmm.

Ozgur Kutay  
So, next slide, please.

Wilson Pearce 
Actually, as you move to that slide, Ozgur, one thing, just if the question is floating in the back of the mind of anyone listening, the part of the relationship that we’ve got with UKEF extends to our international trade departments as well. So global affairs here, for instance, in Canada, where if you’re looking at something and say, geez, you know, I didn’t realize I could

Ozgur Kutay  
Yes.

Wilson Pearce  
I could develop an opportunity if I expanded my supply chain, possibly de-risked it by incorporating somebody in the UK. We can help a little bit with that introduction service because we already have people who we’re currently working with. They may not be the ultimate people you need to work with, but we do have this initial supply chain of people who we’ve approved on our side or you’ve approved on your side.
That gets us starting along with the support of the Trade Commission services on both teams to help you with those intros. So yeah, sorry.

Ozgur Kutay  
Absolutely. They are door openers, very important people. We use our own network as well. I work with a, I think in terms of manpower, they’re much more bigger, both global upwares as well as our department for business and trade. So in some of the markets, we’re not represented on the ground or very large sort of geography.

Wilson Pearce  
Mhm.

Ozgur Kutay 
it’s a very good way to triage through them as well. And one thing I, before moving to this particular topic on this slide, I just want to emphasize that low content requirement actually allows us to work on projects that are led by Canadian developers.
suppliers, all we need is a meaningful level of UK content in the mix. So it gives us room to jointly, you know, look for the same opportunity we financing and CCC leading the contract or managing the contract.
This is a typical diagram, and we can replicate this for many other products, but essentially this is a buyer’s credit scheme where you have a buyer in a country on the upper right hand side, and there’s a UK exporter which needs to apply to us, and that 20% or whatever we agree, and it could be fronted by
or sort of could be co-mingled in a consortium with Canadian exporters as well. And UKIF sits in the middle and there are two, three different types of products normally related with the funding type and size, but they are very similar as this diagram. We provide the guarantee to the bank on the lower left hand side.
And a loan is really booked from the bank to the to the buyer, so that is how it how it works.
The next slide, please. This gives a, in the international financing ecosystem, and I’ll put the broad picture here, and at the very bottom you have
The product life cycle, right? Starts with an idea and launch of the, let’s say, a project, growth of the project, let’s say, building of it, the commissioning of it, scaling, maturity, and decline.
It can be applied to product life cycle, but also project life cycle. Normally, we would come in at the very middle. I mean, we would, we’re not providing grants. So very high risk, very early stage technologies usually work with equity.
So most receive grants or some support, tax credits and so on and so forth. There is concessional financing available, right, for some of those. And these are usually by multilateral agencies, the World Bank, IFC, MIGA, you know, or the regional ones like the European Bank for EBRD or their Latin American equivalent or African equivalent or Asian.
equivalent as a matter of fact. On the right hand side of the scale, commercial banks come in and we’re sitting in between concessional financing. We’re non-concessionary, as I said, but we’re sitting in between that. So we’re in nature non-concessionary. So we’re like the commercial banks in terms of jurisdiction.
but our appetite would be for longer, medium or longer term, stable and cheaper, hopefully, financing. So how we achieve that is through this guarantee that we add. So we kind of take the credit risk away from the project. And at the very right hand, that’s the capital market, usually not relationship driven. It’s going to be
completely, you know, based on an accuracy on the rating of the borrower or the project, right? So that is probably when a project is on its completely de-risked life cycle, or, you know, could be a product that is mature enough to attract that. So next slide will give us some more insights on it.
So you see two bar charts in a way here. At the bottom, that’s the credit profile. So the funding costs of a commercial sovereign loan from a bank on the left-hand side and a UF-backed sovereign loan on the right-hand side.
right? So the idea is to provide this arbitrage. So the banks always keep at profit margin. That’s the red part, right? They will always make some money. The operating costs will need to be covered. You know, that’s coming from banks. That’s again, very similar. What we’re trying to reduce in our financing is that
Let’s say it’s a non-investment grade, but an acceptable level double B borrower. Many countries, many sovereigns are in this pocket around the world, in all the jurisdictions, all the geographies. So, and it doesn’t have to be a double B, but I’m just giving that example. There are no numbers around it. It’s just…
for administrative purposes. So we charge an ECA premium for the service we provide, and I’ll come to how we do that. But that the annual impact of that, right, for the funding costs and the sort of the risk premium of the ECA,
which we are a AA government. So that should create the arbitrage. So the total of the blue and the dark blue should come to the, should be lower than the light blue on the left hand side. So that is how the sweet spot lies. If we’re talking about a AA bar where our value is much less, if we’re talking about a single B, double B,
triple B, the non-investment grade or low-end investment grade borrowers, which most of the developing world is, that is where the sweet spot lies. Next spot, please, quickly.
Oh, this is something we covered actually. We cover, we accept services, goods and intangibles as UK content. But I should add on the right hand side, I should mention about supplier affairs. So if it is a project that is mature enough, it means CCC originated it.
there’s a Canadian, let’s say, lead contractor looking for UK supply chain into the project to meet our minimum 20% or whatever we agreed on. That is the time and if required, sometimes there’s already a good sort of a UK player in that mix that is known, well known to the market. But if not, and if
There’s a lot of sort of suppliers that are small. We do a rd showy coolant in commercial sense. So we spend the day in the UK to introduce the project, the project sponsor, the contractor, the bank, you know, and sometimes we use our sort of
posts in that country. Sometimes the ambassadors, High Commissioners come in and present in that. It’s 1/2 day of presentations in London, usually in a nice place. QEQE2 Centre, you know, one of the mention hall or one of them, and then do
B2B arrangements in the afternoon so that either an MOUs are signed or contracts are done or exchange of business cards happen. So this is a service that’s only for 12,000 pounds. It’s obviously your time as well as your flights, but the service is really well worth given the size of these projects. Next slide.
Yeah, so just to reiterate what we covered, we would support overseas companies as well. So it doesn’t have to be a UK exporter, which is, I think, the critical ingredient of this partnership with CCC, a Canadian company, or a
a Canadian-led consortium or a Canadian-participated consortium can apply to us as well, as long as they undertake the minimum 20% UK content requirements. Usually, and timelines, usually, again, if it’s a sovereign, it’s not a very complex sort of a environmental risk or
So, environmental social risk project, you would expect three to six month process. Sometimes it’s longer. I’ve seen longer because of the data or due diligence that need to be to be done. Sometimes it’s faster. Sometimes it’s just one equipment, one airplane, one defence sort of equipment is much, much quicker.
Next slide, please.
Okay, I should here mention about a slightly different version of our of our virus credit program. This is targeting, and especially given that we’re talking about clean tech and we’re considering, and when we say clean tech, we actually can cover, you know,
solar and wind, as well as all the geothermal, you know, waste, civil nuclear, you know, all these areas, that’s possible for us, right? We’re happy to cover them. We can’t do fossil fuels. That’s our only sort of area that we can do, including natural gas. So we can’t do that. But
Those projects will may require and those sovereigns or the job owners in those countries may require some preliminary work, right? They may say, oh, I will do this. I will give you this business, but I need this feasibility to be financed, right, before shovel. So pre-shovel.
time. So as long as it is a, it’s a non-shovel, non-field office type of work, desktop work, so it’s services only and one single contract, we could finance up to 85% of it as well. So it is targeting feasibility, pre-feasibility design sort of studies.
The terms are slightly different. We would ask to be repaid in maximum two years after completion. So it’s whereas a project can be up to 15 years. Clean energy, it could be 22 years. This is for two years. The reason being we expect this to be refinanced with the actual transaction, right?

Wilson Pearce  
Yeah.

Ozgur Kutay  
This is just to give a cash flow deferral option or some waiting space for that particular job owner, that sovereign, that government to be able to carry out the clean, the pre-feasibility study. Our aim is obviously to be able to stay in the game, influence, you know, more
UK and Canadian content because we will be working with them and socialize, you know, to decision makers in the organization as well when it comes to credit. And there is no commitment for us to undertake because that, you know, there’s no legal commitment. We’d like to continue in the refinancing, but we, it will require UK content at
in the actual project, right? We’re talking about a simple early project here, usually done by these multinational engineering firms, and we can finance that contract. We put a maximum 30 million pound limit, usually. We’re happy to look to consider if there’s something more than that.
Again, all rules apply except for it has to be office work services only, single contract, up to 85%, same thing, and up to two years of repayment, it can be a bullet repayment at the end, which will allow refinancing. And so that’s key. We don’t want to trigger, but the reason, another reason to keep it under two years is we don’t want to trigger
environmental social review, because it’s below 2 years, below OECD sort of limitations, and we don’t want any field work, right? So that would be faster completion and sort of moving to the actual project, hopefully. Next slide, please.
Case studies.
Okay, so now our past, recent past case studies are, that I put here, I put some clean energy ones, but also put some ones that are not clean energy, but shows good example of a third country collaboration. So this is a project, and if we go to the next one, it’s a 600 megawatt wind farm, offshore wind farm in Taiwan.
We financed our financing portion was 89 million pounds. Our exporters were various, but they were led by two, Subsea 7, that’s the cabling company, and the agent Murray. What else I should say here? Yeah.
Exactly. So it has 62 wind turbine generators. Next slide is a solar example. This is something I was personally involved before. I’ll mention this basically is one of the largest in the world, definitely in Europe. It’s 1.3 gigawatts and powers 2 million homes.
Next slide will give some details on it. This is GE Technology. So you may argue GE is not UK, right? And this is precisely what I’m talking about. GE is a US firm, a global firm with many supply chains, UK supply chain for a project that is 1.1 billion.
dollars of financing in total. Their contract was around 250 and targeting not panels but inverters, framing, some technology for angles, tracking the sun and wiring. So that contract we were able to finance about.
293 million of the billion financing. So we were a significant lender in that one. I think the important thing here is that even if we had a small UK content, we could leverage it and finance and become a big lender in a large project. One second is that we work with another country’s lead contractor, GE.
Next slide is another Taiwan offshore example. If you move to the next one, it’s 376 megawatts and 47 new turbines, slightly smaller than the earlier one. We finished for 250 million pounds equivalent. The interesting thing you see is the
Taiwanese dollar, 9.2 billion financing, because it was done in one of those exotic currencies, I would say, non-hard currencies. And the exporter was essentially the wind turbines, foundations, and auxiliary facilities.
There is one more, which I didn’t include here, Hailong, again, done by a Canadian lead sponsor, right? It’s Northland Power, which is based out of Toronto. That’s in Taiwan as well, and we finance that too. So along with many ECAs.
Next slide. Next slide is actually three studies in one page. The reason I include none of them are in clean tech, but the reason I included them is that it’s precisely the third country collaboration I mentioned. And the first one, that’s a pediatric and maternal healthcare facility in Guyana.
which the lead contractor was Vamet, which is an Austrian construction firm, a hospital construction firm. And they were able to buy enough UK content for this 250 bed hospital. The one in the middle, again, another one I was involved personally,
This was Bechtel again with a local contractor, and they built part of the European motorway network called Morava Corridor. We financed around 430 million of a billion financing.
that was in euros. And the last one here is Six Flags, the way we know the US licensee, licensor, sorry, Six Flags theme park, their first theme park in Saudi Arabia. We financed in 24. Interesting one is that it’s a US licensor. Borrower is the Saudi government.
their PIF, their sovereign wealth fund guaranteed to the sponsor of the project, but the contract is French, so again, it worked quite well. Next slide.
Yeah, the premium I mentioned, we charge a premium up front and financeable, so we can gross it up, add to the notional amount of the financing, so it can be paid over time, over the life of the loan, which can be, you know, 10 years, 20 years.
It can be paid separately as well, then gets a slight discount, obviously. But it’s a function of credit risk, the rating, OECD rating of that country, really, the length of the contract, how much time would it take to disperse the loan, and how long will it take to repay the loan?
So essentially, there’s a premium calculator on our website, on OECD’s website. If you Google it, you can do some number crunching around it as well. And for sovereigns, which is our topic today, it’s always transparent. So you will always see, you can calculate yourself.
So no problems there. Obviously, the bank charges a margin. What is the total cost? If you go back to our sort of our comparative chart of the bar charts, of cost of funding, obviously, the bank charges a margin. That’s going to be there, but it’s going to be hopefully less with our guarantee rather than
charging directly to that developing country project owners. Next one, please.
Oh, okay, how to apply. And this is not an exhausted list, but essentially I just wanted to emphasize when is the right time to have a discussion on a specific project, right? We would normally like CCC, we would like to see the scope, right? What is the project is about? Who is the project owner, in our case, the borrower or guarantor, the financing structure that is sought.
after the planned UK content and the Canadian in this case as well, value, currency, so on and so forth. Yeah, so that might be the end actually, Georgia. Yeah, that’s it. Ready for questions?

Wilson Pearce  
Great.
Well, thank you very much, sir. And I mean, I’ll just, I’ll do a little bit of a recap here in terms of some of some of the issues, you know, because it’s, we’ve been dealing with this for a while. For those of you who just stepped into the call and they’re sort of, you know, kind of getting a sense of what we’re doing and why, you know, again, there’s a couple of interesting things.
Why CCC established this relationship with UKEF?
to provide Canadian exporters with additional opportunities around financing. And I think Ozgur’s comment around the role that ECAs play, export credit agencies play, particularly in the countries that have a rating below a double B in providing you with competitive and attractive financing is great.
The other comment worth noting that Ozgur made is that is that UKEF is often one of a number of ECAs. UKEF works with Export Development Canada here in Canada as well on projects. If you’re already a client of Export Development Canada, you know, you’ve already gone through some of that approval process. You know, you know, some of that works.
So the flexibility that UKEF brings from our perspective, you know, quite selfishly when we’re looking at the market, yeah, we see far more opportunities out there for exporters than that small subset of G2G opportunities. That doesn’t prevent you from speaking to UKEF.
By the way, UKEF can, as Ozgur was showing you, the examples he’s presented are not G2G opportunities, so that’s fascinating, but from our perspective, we would like our exporters to understand that there is this other option where you can expand your supply chain, you can expand your partnership.
ecosystem and involve teams from the UK and work with an organization that’s got, you know, significant experience and footprint around the world because
The 2 things that we have found in trying to help support the larger scale, and by that I mean anything over 10 million.
You know, projects of 10 million and above with utilities, on the one hand, they’re lovely because they’ve all got an ROI. So you can do the math on how best to make them make the business case. But they often require a feasibility study. And feasibility study support is really hard to come by
in an untied, in an unencumbered manner. I’m not going to oversell the feasibility study, by the way, Ozgur, because there’s a lot of criteria that you have to meet to get it. So I don’t want people to think they’re just going to walk into free money. But the concept of a feasibility study to bank, and what I’ve also seen with the utilities out there is that
a number of the locations where we operate, the utilities do their own feasibility study, and then they go to the banks, and the banks are like, yeah, that’s not good enough. You’ve just done your own numbers. So the value of having an independent body do that feasibility study and bring it back for further financing is something that I think a lot of people.
will begin to appreciate in time. And it might be one of the things, I don’t know, I don’t know enough about that, but it might be one of the things that has been slowing down some of these utility investments is that the utilities were all doing those feasibility studies themselves and didn’t realize that somebody had to do it, but somebody who could bring a wider solution.
So yeah, no feasibility study, no money. And for us, all we do is contract. So it’s very frustrating for us to bring people to a contractually agreeable view of the world and then be unable to finance it. So, you know, I would encourage people to consider the financing piece, discussions with people like you, CAF and the other financing partners.
as far ahead in the discussion process as possible. Once you get past, you know, the straight PO sort of transaction where you’re supplying components to a larger to a larger supply chain, you know, I’ve just we’ve seen a lot of contracts that get to the equivalent to the 11th hour and then they sit there.
while we arrange the financing. So I just, I really want to encourage people to think about financing a little bit earlier on so that that can be incorporated into the broader discussions. But I’ll stop there so that we’ve got time for questions as well. And again, thank you, Ozgur. It was a great presentation.

Ozgur Kutay  
A pleasure. And I just want to add one more thing on your services, the feasibility part. One of the reasons we came up with this product was that many countries have granting mechanisms, right? And I’m not going to name the countries, but it’s a wide spectrum of countries. Their governments provide a grant so that they can, their company can get a contract. Now, we don’t do that. We just want to plug that gap by providing a solution that sometimes, you know, for contracts that requires G2G, they will say, look, only if you finance, you know, you know, you grant or kind of finance my internationally recognized international standards feasibility study, usually done by a major international firm. I’m okay, but you need to pay for it. And this is this product really addresses that. And there are many of these firms that are that have co-location in UK and Canada. And I’m talking about, you know, Atkins and WSP and Stantec and Hatch and Arup and these companies actually, there’s a lot of synergies between the two countries. And even in a single contract, they may use a partial UK and partial Canadian accesses, depending on where the specialization lies, and that will trigger that contract for us, meeting our minimums, right?

Wilson Pearce  
Yeah, so you’re Ozgur and I could go on and on and on about the things that consume our days. We should, yeah, we’ll turn it over and please, we’ll turn over the attendees’ task. Yep.

Georgia Fox  
We had a few questions about transaction deal sizes, minimums. I think you guys have answered most of that and we answered in the chat. If you want to expand on that. And then we also have, does Coastal Gateway Port shipbuilding and supply chain development qualify for funds to be secured? We are EDC approved currently. So that’s a little bit more of a specific.
specific company question.

Wilson Pearce  
Yeah, I do see Natalie responding in the midst of that. Thank you very much. Boy, that’s great multitasking.

Ozgur Kutay  
No.
Exactly. So we have, you know, we are usually very flexible in terms of size. I mean, I mentioned this 8 billion pounds equivalent of the project, right? That’s for the Polish government, short-range missiles. But we also done, I’ve been involved in transactions that are a million in size, even less. So
That’s a very wide spectrum. We have different sets of products. The threshold is 30 million pounds, let’s say 50 million Canadian colon. For the ones about that, we use our regular LMA documentation where we carry the documentation responsibility, that’s including the loan documentation, and we negotiate or the bank
with the borrower on covenants and other items. On the below 30 million part, it is infeasible to run a very sophisticated documentation. So we have a specific documentation for that.
It is negotiable as well with less sort of leeway, but yeah, we could do, we could do very low. Your threshold is 10, you know, I think we can fairly easily target that size sort of spectrum.

Wilson Pearce  
Georgia mentioned a company and I opened the door on this, so I feel responsible now to follow up. Georgia mentioned somebody in the chat had said, we’re already registered with EDC. So could you follow up? I mean, your registration process is refreshingly straightforward.
But are there criteria that a Canadian company should think about before they start to register with you? Is there a UK presence or a like how far into the UK piece do you need to have them thinking before they talk to you?

Ozgur Kutay  
Sure.
Sure. First of all, we can work with EDC, right? I mean, there are export credit agencies, especially the OECD ones, and especially the G7 ones, are very close to each other in terms of co-financing projects, right? If there’s a project with multiple…
financing sort of countries, multiple supplier countries, then their export credit agencies can either co-finance or sometimes the borrowers and the banks prefer to deal with one ECA rather than seven, right? And

Wilson Pearce  
Hmm.

Ozgur Kutay  
In those cases, for instance, in case of a sovereign borrower, we could front the whole deal and EDC can provide an reassurance to us and we account on a net risk basis. So whatever we agreed on appetite, that’s going to be there plus an amount that covered.
by EDC. We will cover the whole thing on paper, right? So nominally we would cover the entire transaction, and EDC will cover their own portion to us as reinsurance. So it is possible, being qualified by EDC, it doesn’t automatically trigger something for us, because we would seek, obviously, the exporters and
contractors credibility, but having an EDC credential is great, right? That’s a good starting point. We will do our own due diligence, more on your client, but also on the supplier as well. And we would seek that minimum 20%, preferably a little higher than that. Normally we attain, normally it’s 25 to 35%. I should be up front.
So we can still provide three to four times of the UK content in financing to your client.

Georgia Fox  
We had another question about a company who’s dealing with an Irish company helping them with a UK customer. What is the relationship between UK and EU as far as the 20% UK content?

Ozgur Kutay  
Simple answer is UK is UK, EU is EU. So UK obviously have the devolved governments as well. So when I say UK, it’s England, Wales, Scotland and Northern Ireland. So anybody, any supply chain, any supplier from those will count.
the others won’t count. Now, if, for instance, there’s, and I’m just making up, Republic of Ireland or French or German supplier as well, we’re happy to work with that export credit agency and cover that portion as well if they are.

Wilson Pearce  
Yeh.

Ozgur Kutay  
in the game. If not, remember our financing is multiples of the UK content, so it could be, yes, it could cover them even if there’s no appetite from those agencies, technically speaking, but it wouldn’t on itself trigger a cover. We would still require the UK content.

Wilson Pearce  
I saw a question here in the chat. I suspect it’s aimed at yourself. I’ll give a short answer, but it’s asking about not supporting hydrocarbon, but energy recovery technology. I’m thinking it’s CCC type technology.

Ozgur Kutay 
Oh.
Yes, yes, absolutely.

Wilson Pearce  
We can support it contractually, if it’s CCS CCC you here.

Ozgur Kutay  
Right. Okay, so the rule, and this was a governmental decision, it’s not our decision since we’re a government department. We’re obviously bound by that since 21. So we weren’t doing coal for a long time, right, for decades. But we dropped doing oil and gas in 21.
So what we mean by that is that if the fossil fuels are used as a fuel, whether for exploration, sort of transport or downstream, midstream, we can’t finance that project. If there are inputs such as a raw material,
It could be a fertilizer.
sort of project that has gas as feedstock, right? Or A petrochemical project, we could finance them because they’re raw materials rather than fuel. Now, stuff like new tech, relatively early stage technologies, carbon capture to reduce carbon, right?
SAF, that’s sustainable aviation fuel, direct air capture, direct sort of hydro capture, yes, we could finance them. Obviously, we need the UK content and happy to look into those specifically, but that’s a positive.
Answer.

Wilson Pearce  
Yeah, I think that the, if it helps, and I apologize, James, if you’re familiar with this, but the Glasgow Protocol is kind of one of the guiding documents that governs, you know, that provides some of the boundaries as to, you know, what is defined as acceptable and unacceptable for governments to support.
Sood.

Ozgur Kutay  
Right.
Yeah, the only, and I’ve seen, because gas is an important transition fuel, right? So some agencies continue supporting that. We don’t. And the important criteria is that when we finance something, we should not be extending the useful life of a fossil fuel asset. So that’s an important criteria we look into. So even if you kind of reduce carbon but extend life of a gas facility, then that wouldn’t be within our current target market.

Wilson Pearce  
Yeah.
Right, right. And Mike’s got a question here from the Coastal Gateway. Ultimately, the question is, have we done deals with Canadian provinces and P3 structures? So from our perspective, the answer would be no, because we’re exclusively outward focused. So we’ve done P3 structures, but it’ll be with Bermuda. It won’t be with Manitoba, to use a funny contrast.

Ozgur Kutay  
Yeah, I should say we are happy to look into Canada, but obviously within this partnership, MOU, we will focus on 3rd markets, so non-UK, non-Canada markets.

Wilson Pearce  
Yeah, you are though, yeah, yeah.
Yeh.
Yeah. But if there was a UK partner interested in going into something in one of the provinces, you can do that. Again, that’s for everyone’s benefit. That’s one of the things, right? Like you don’t, you’re not limited to us and UKEF. UKEF has a wider mandate than we do. So yeah, please don’t limit yourself based just on our mandate. Yeah.

Ozgur Kutay  
Sure.

Wilson Pearce  
All right, and we’re down to the final minutes.
I’m not seeing any other questions, Georgia, unless you’re seeing them somewhere and I’m missing them. I just happened to have the chat open on the side, so I was seeing a few.

Georgia Fox  
Nope, I think that’s all. So we can wrap it up and we’ll send our follow-up email recording everything in the next week or so.

Wilson Pearce  
Super. Great. All right. Well, thanks. Thanks very much for coordinating with Georgia and Ozgur. Thank you very much.

Ozgur Kutay  
Oh, pleasure always and thank you for providing this platform for us to kind of collaborate further between the UK and Canada.

Wilson Pearce  
All right. All right. I’m glad everyone. Have a great day. Next time. Cheers.

Ozgur Kutay  
Thank you. All the best.
Bye-bye.