Innovo, formerly known as ASGC, is headquartered in the UK but has a major presence in the Middle East and is active as an engineering, procurement and construction contractor in Africa. GTR speaks with Innovo’s structured finance director Madiha Aslam about the company’s relationships with export credit agencies (ECAs) and the evolving export finance landscape.

 

Snapshot:

  • Name: Madiha Aslam
  • Company: Innovo Group
  • Title: Structured finance director, Innovo Projects
  • Countries: UAE, UK
  • Sectors: EPC, trade, ECA financing

 

GTR: Please tell me about what the Innovo Group does and your role in the company?

Aslam: Innovo is a built-environment player – one of the largest contractors in the Middle East and a leading top-tier contractor in the UAE. Historically, we’ve always been a construction-focused business. More recently, the group has also ventured into real estate development in Canada, Egypt, Dubai and hopefully soon, the UK. I sit within the Innovo Projects vertical, which primarily looks at providing EPC and financing solutions for large-scale projects, currently focused on critical social infrastructure across Africa and commercial infrastructure in the Middle East. I look at how to bring about solutions for projects that require financing. Given our construction background, we’re able to provide holistic commercial and structured procurement solutions on projects to attract liquidity, and that’s how the ECA-supported financing component comes in.

 

GTR: Which export credit agencies have you worked with for projects in the Middle East and Africa? Do you have go-to ECAs for these projects?

Aslam: Innovo Projects started off in 2015 as a UK entity, and we are the largest exporter relationship for UK Export Finance (UKEF) globally in the construction sector. You could say UKEF is our most long-standing ECA relationship.

It has helped our expansion across Africa and we have built the broadest supply chain with the UK as a result. What we are doing now is expanding that ECA remit, especially in areas where capacity is needed due to increased demand. When a project is identified, we first consider the broad country appetite that some of the main ECAs have for that country – these could be the likes of UKEF, EKF [now EIFO, of Denmark], EKN [of Sweden], Atradius DSB or Serv [of Switzerland], to name a few. We then consider, for that type of project, what are the ideal countries to source content from? As an example, for a hospital, UK sourcing is a good option; if it is a water project, then Serv might be great, too, given their supply chain. There are other large ECAs like Euler Hermes and BPI France to potentially target as well, but we’re still navigating their requirements on their ability to work with non-home country EPCs.

 

GTR: You mentioned quite a few ECAs there; are there any that have in recent years become more active in the areas Innovo works in, or doing more business than they have done traditionally?

Aslam: Within the African landscape, UKEF has an increasing focus on business development I’d say; they have expanded their origination team across Africa, and worldwide actually. They also tend to bring one of the largest cheque books, so to speak, in terms of coverage for different countries. Having said that, we are seeing the Scandinavian ECAs become more flexible in looking at opportunities. We’ve also seen the likes of Kuke from Poland, for instance, which has the ability to take very specific views on different countries which other ECAs, for whatever reason, might have limited appetite on.

 

GTR: Have the structures of ECA-backed financing, or products that ECAs offer, changed in recent years?

Aslam: In addition to the recent changes in the OECD Arrangement [on export credits], ECAs in recent years have become more open to EPCs that are not based in their countries. UKEF was perhaps one of the few ECAs to become a lot more flexible on that front, supporting non-UK entities based on the supply of UK goods and services. Following that, we’ve seen Scandinavian ECAs use similar approaches regarding non-home country EPCs to boost their trade potential. Most recently, in February, the French Treasury announced its plans to start supporting non-French exporters on projects with French content, at the annual Bercy conference. I think this flexibility has probably been the biggest change that we have seen, and some ECAs are doing better at it.

 

GTR: What’s at the top of your wish list for products or approaches that would like export finance banks and ECAs to take?

Aslam: There are a few things. One is that although the OECD Arrangement has been updated to allow for longer tenors on ECA-supported transactions, not all ECAs are issuing support on that basis. Currently, it’s case-by-case, so some cohesion around that would really help. The other challenge is whether banks are willing to go longer term even with ECA cover; there’s some lack of clarity around that. Another area is the charging structure of ECA premiums – as they are charged upfront, it becomes more challenging for relatively more developed countries with access to capital markets to consider an ECA solution in the context of longer-term financing plans where they may wish to refinance debt in the medium-term. Allowing a periodic or annual premium charging structure would help make ECA financing a more flexible and attractive liquidity option. And lastly, one we have increasingly been stressing: the rising ESG-related requirements in the past few years have been leading to extended timelines for the execution of projects, to the detriment of development initiatives across different countries and the marketability of ECA financing as a product. We clearly need more holistic efficient solutions to bring real change to the countries we operate in.

 

GTR: Over the last few years, we’ve seen some Middle Eastern ECAs either commence or build up operations, for example Etihad Credit Insurance (ECI), Abu Dhabi Exports Office (Adex) and Saudi Exim. Have you done any transactions with those agencies or engaged with them?

Aslam: Yes. We arranged our first Adex-funded infrastructure project in Nigeria last year and are currently working on a few other opportunities with them. We’ve also had ECI reinsure one of our transactions in Angola. Given our origin and large presence in the UAE, it is a major home base for us and we’re really keen on building our UAE relationships.

We have also engaged with other entities such as Saudi Exim and Qatar Development Bank – the latter is more focused on the short-term credit side – but there are no active transactions yet. We are always happy to explore an opportunity and enable building trade, to the extent the project is right.