Join industry expert Sebastien in a captivating interview as he shares his 13 years of experience in the utilities infrastructure sector. From his background in project finance and investment transactions to his insight on the growth of the Middle East’s utilities development and project finance industry, Sebastien provides a unique perspective on the challenges and opportunities in the sector. He also shares his personal experience navigating the pandemic and the changes it has brought to the industry. Whether you’re looking to enter the sector or just seeking to expand your knowledge, don’t miss this opportunity to gain valuable insights from an experienced professional.
Nick: Can you give us an overview of yourself?
Sebastien: After gaining experience in the finance and defence electronics industries, I joined the utilities infrastructure sector 13 years ago. Over the years, I have developed a solid background in structuring, developing and closing water, energy, and waste projects, M&A deals, and commercial transactions in the Middle East, Turkey, Africa and Asia.
My expertise includes in-depth knowledge of project finance, investment transactions, and asset and share-based transactions, which is complemented by a good understanding of business development and financing aspects, both equity and debt. I have played a role in the review and development of several successful IWPs and ISTPs in the region, including the Salalah IWP and Jeddah Airport 2 ISTP, both of which achieved successful financial closure.
Nick: How does the Middle East utilities development & project finance industry compare to the international sector?
Sebastien: After a relatively quiet period, the number of non-recourse water and power projects in the Middle East began to surge again in 2018. This was driven by economic and population growth, as well as the local governments’ desire to develop more environmentally friendly power, wastewater, and water assets.
Saudi Arabia’s Saudi Water Partnership Company and Renewable Energy Project Development Office have been very active for the past three years. They have tendered and closed almost a dozen projects, the most recent being the Jeddah Airport 2 ISTP, which reached financial close in early September 2020. The development of utilities projects in Abu Dhabi, Dubai, Oman, and to a certain extent in Qatar, has followed a similar trend. This rapid pace of development of utilities projects in the Middle East is unmatched anywhere else in the world.
The significant portfolio of projects in the Middle East has also attracted key international, regional, and local lenders, who have shown a real appetite for financing these long-term projects over the past few years. Despite the challenges posed by the COVID-19 pandemic and its impact on the global economy, all the regional off-takers have managed to keep their tenders and projects on track.
Nick: What are the unique challenges that you face in the region?
Sebastien: The Middle East is growing and developing at a very fast pace, which presents a challenge for companies to adapt their strategies quickly and efficiently. Competition is a key factor, and it is unique in the Middle East as it is between international players, regional players, and local players. The latter have an advantage over larger international players due to their adaptability and quick reaction time.
Regarding financing, the multiplication of projects in the region has caused some lenders, particularly international banks, to become more selective in the projects they are willing to finance, the bidders they are willing to support, and the countries they are eager to develop in. The increase in projects is seen as a great business opportunity, but it also presents a challenge for lenders to assess the projects they want to invest in.
Nick: What are the areas of growth opportunities you see for the sector?
Sebastien: Despite the current economic slowdown, the GCC countries will continue to strive for increased supplies of potable water and improved wastewater treatment capacities. As a result, we may see new desalination and wastewater projects being tendered by the main off-takers in the region over the coming months. On the power side, the clear trend is the development of renewable energy projects. All of the GCC countries are now putting all their efforts into promoting and developing solar and wind projects, with slight variations in approach. I can also see new opportunities emerging for waste-to-energy projects. For example, the Emirate of Sharjah is currently developing a 300,000 waste-to-energy plant. There will be more projects coming to the region, in Abu Dhabi, Oman, or Saudi Arabia.
Nick: How have you been affected by the recent pandemic and the economic slowdown?
Sebastien: From a personal point of view, the pandemic did not have a negative impact on me. Like many people around the world, I simply adapted to new working methods: no travel, limited physical contact and heavy reliance on video conferencing tools. To be honest, I was busier during the lockdown period than I have ever been. Overall, it was a success. What we once thought would not be possible, such as closing a project financially without meetings and solely through exchanging documents via email, turned out to be completely successful.
Nick: What will you do differently as a business as a result?
Sebastien: In a region where face-to-face interaction was the norm, COVID-19 has introduced new methods of communication that many of us thought were not possible – until now. While things will hopefully return to normal soon, it’s unlikely that travel will be as extensive as before. Utilizing tools such as MS Teams and Zoom for meetings will not only allow organizations to lower their SG&A, but also boost efficiency. How many of us used to spend a whole day travelling for meetings that ended up lasting just a few hours? This could become a thing of the past.
Nick: What advice or recommendations would you give to someone looking to enter the sector?
Sebastien: Doing what others already do, but only in a cheaper way, is usually not a good approach. I believe that innovation should drive anyone’s approach when entering a market, and the utilities sector is no exception. The reality on the ground may sometimes be more complicated. Most, if not all, power and water projects are usually developed based on requests for proposals, which usually contain very stringent instructions to bidders. Most of the time, these tenders do not offer the bidders the opportunity to propose alternative offers. However, there are always ways to innovate, offering newcomers the opportunity to penetrate a new market.
Nick: What is the best thing about ex-pat life?
Sebastien: Mixing with other cultures opens up your mind and provides you with a wider and more authentic view of the world.
Nick: What is the worst thing about ex-pat life?
Sebastien: In every expat situation, there are pros and cons. In my case, I would say that it’s more of a frustration. Regardless of whether you have lived for 10 or 15 years in this part of the world, as is my situation, or only for 1 or 2, your situation will be similar. You will always remain a foreigner. There are some countries in the world that grant foreign residents the right to apply for a permanent residency visa, but this is not currently the case here. However, things are changing rapidly, meaning that anything is possible. Just look at the recent introduction of retirement residency visas by the UAE authorities!
Nick: Biggest passion or hobbies outside of work?
Sebastien: Surfing. The UAE may not be the ideal location for surfing, but the winter season can sometimes bring a small amount of swell. Surfing is a challenging and physically demanding sport that requires confidence and self-control. It’s similar to everyday life: you need to assess the current conditions, anticipate the incoming wave, and weigh the risk and reward. Taking more risks could lead to the ride of your life, but overestimating your abilities could lead to trouble.
Nick: Favourite holiday destination?
Sebastien: Any surfing destination would have my preference, from Sri Lanka, to the Maldives and Indonesia. A bit further, Australia is usually at the top of my list. I truly love this country for all that it has to offer.
Nick: Who is your biggest inspiration?
Sebastien: Jacinda Ardern, the former Prime Minister of New Zealand, embodies modernity, flexibility, and thoughtful reactivity. I personally think she has dealt exceptionally well with the Christchurch terrorist attack, the Whakaari volcano eruption, and the COVID-19 pandemic.
This brings us to the end of this interview. Thank you, Sebastien, for talking with BWP. It is our pleasure to have you.