THE ECHO - Ferrostaal

Mr. Gesinn, MAN Ferrostaal and its partners recently received
an award for the financing of a petrochemical plant in Chile
(see the article on page 50). What was so special about this
financing package and why did it receive an award?
The greatest challenge in this project was finding a way to incorporate
private capital into a new plant that was to be owned and
operated by the Chilean state-owned company ENAP [Empresa
Nacional del Petroleo]. This demanded a financing concept that
was fully tailored to suit the needs of the customer and the
particular situation.
And MAN Ferrostaal managed to do just this.
Yes. We and our partners made this a reality. Admittedly, we had
previously worked on similar projects for the same customer and
we were able to tweak and improve the model from one project
to another. We have lots of experience of customizing financing
concepts for individual customers.
Can you describe a typical financing concept?
For MAN Ferrostaal, there is no such thing as a typical financing
concept. In fact, that is the defining characteristic of our financing
solutions. They are always tailored to our customers’ individual
needs. Our financing options assume different forms, depending
on the sector, region and project. What they all have in common
is that they form an essential foundation for our business.
So you always start from scratch with each new financing
project?
No, of course not. We have certain prototypes. Broadly speaking,
there are three different types of financing concepts that we can
offer our customers: Project financing for large plants, export
financing for machines, and advance financing in the area of
steel logistics. We will leave aside the financing of production
plants in our automotive segment for the moment because this
involves investing in our own means of production.
The most individual type of financing is probably used in the
industrial plants business.
That’s correct. The industrial plants business is certainly very
complex. We focus on the construction of large plants and very
clearly on project financing, where we can play a very important
role. We occupy a unique position in the market as a processindependent
constructor of large plants and engineering company
with a project management focus. Our most important capability
in this area is that we develop projects from the ground up,
and sound financing models are an essential component of this.
This is exactly where our strength lies and what attracts customers:
We combine financing expertise and operational responsibility,
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and can therefore judge very well what makes for a sound project
and how it can best be realised.
Who are MAN Ferrostaal’s partners on these kinds of projects?
We have been collaborating for years with KfW (the Reconstruction
Loan Corporation) and Hermes and this has worked very
well. For example, all methanol plants in Trinidad with a total
volume of 2.5 billion were completed with the help of these partners.
But we have also used these partners to get many other
projects up and running. The construction of these kind of plants
would be inconceivable without the necessary financing.
However, we also work with a range of foreign credit institutions
and credit insurance providers, depending on what combination
of partners makes the most sense in each case.
Our track record must be pretty long then.
Indeed it is. We have been doing this for about 25 years. But we
still employ a flexible approach. Financing models that may have
worked well yesterday and today are not necessarily a recipe for
success in tomorrow’s projects. Innovation is essential, and with
our new Board Members Dr. Knothe (Projects and Contracting)
and Dr. Lesker (Service and Sales), both of whom previously
worked very intensively on financed projects, we are most
definitely looking forward in order to conceive new financing models.
Which areas require new financing models?
New technologies, for example. This is perfectly illustrated by
the example of biodiesel and renewable energy form, but power
plants also require new financing models on an ongoing basis.
There are many projects in this area, but also a huge demand for
financing. Financing plays a crucial role in new technologies that
have not yet been tried and tested in the market. The risk
involved in employing new technology in a plant also requires
new market mechanisms. Not everyone is willing to invest their
own private capital in such a venture. With these kinds of projects,
we try to come up with financing models that spread the financing
risk among various parties. This is the very essence of project
financing: Placing the burden of risk on several different shoulders,
so that everyone feels their own share of the risk is acceptable
and everyone can enjoy watching the project unfold. However, we
are not indiscriminate when it comes to projects involving new
technologies. We select opportunities where we can asses the risk
and where the benefits are obvious.
How does MAN Ferrostaal distinguish itself from the competition
in the area of project financing?
According to the definition of the VDMA (Verband der deutschen
Maschinen- und Anlagenbau – the German Engineering Federation),