As Grégory Clemente, CEO of Proparco, points out, issuing project bonds is a big first for us and this operation is innovative on two counts: it is the first time that a Turkish infrastructure project has been financed using green & social project bonds and the first 20-year bond issue on the Turkish PPP financing market. This is also a highly symbolic project as it enables us to support Turkey in its drive to improve its public health service and healthcare access (3rd pillar of sustainable development).
Boosting public-private sector complementarity
Turkey, with the help of the World Bank, has been overhauling its health sector since 2003 with the aim of improving access to healthcare and gradually setting up a universal healthcare system for the whole country. As part of this strategy, the Turkish Health Ministry has launched a public-private partnership (PPP) programme and the project to build a public hospital in Elazig is one of the first beneficiaries.
In 2014, Proparco already granted a €30 million loan to develop a hospital complex in the South-eastern Turkish city of Adana as part of a PPP  . This new agreement involving €40 million over 20 years has just been signed with ELZ PPP Sağlık Yatırım A.Ş, the Turkish entity heading up the project. It will be used to finance the design and construction of a public hospital in the Eastern Anatolian city of Elazig and to cover upkeep and maintenance costs for the next 25 years (including the provision of facilities and services).
ELZ PPP Sağlık Yatırım A.Ş has the same backers, developer and operator as the Adana project, including Meridiam, France's No. 1 infrastructure fund – with whom Proparco has worked on three transactions over the past 18 months – and the Turkish-based building group Rönesans.
This project also has the backing of the World Bank group (IFC and MIGA), the EBRD, and Proparco's Dutch counterpart, FMO.
An innovative financing structure
80% of the total project cost of €360 million will be financed by debt and the remaining 20% by equity financing. Proparco will invest in the project by subscribing to Green Project Bonds issued in a private placement arranged by HSBC. The bonds are covered by the EBRD / MIGA credit-enhancement scheme and have been rated Baa2 (i.e., Investment Grade) by Moody’s.
Proparco aims to take a proactive role in opening up the healthcare PPP to other institutional investors, thus boosting funding levels for these types of projects in Turkey.
As Grégory Clemente explains, we eventually aim to deploy this type of financing model in other countries as well.
A social and environmentally-friendly project
The new 1,038-bed public hospital complex will improve the quality and expand the range of treatment currently available in the province of Elazig, i.e., cancer treatment, radiotherapy and emergency and intensive care services. In five years, it should be providing 260,000 beds and over 2 million consultations a year.
The project will also create 3,200 jobs during the three-year construction phase as well as 3,800 indirect jobs over the next five years.
Lastly, the project bond has been certified as “Green and Social” by Vigeo, thus ensuring that both the construction and operation project phases will deploy "carbon-light" approaches.
 In 2014, this project – Adana Integrated Health Campus – was awarded first prize as Europe’s best Public Private Partnership financing project by IJGlobal, Project Finance & Infrastructure Journal. For more information about this operation