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The Guidelines have not been prepared with any specific transaction in mind and are meant to serve only as general guidance. It is therefore critical that the Guidelines be reviewed and adapted for specific transactions To find more, visit the Guidelines to Implementing Asset Recycling Transactions Section Overview and Content Outline, or Download the Full Report.

This is a new section of the website and is currently in draft form.  For feedback on the content of this section of the website or suggestions for links or materials that could be included, please contact the PPPLRC at ppp@worldbank.org.

 

 

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The Guidelines to Implementing Asset Recycling Transactions is intended to be a living document and will be reviewed at regular intervals. Visit the Asset Recycling: Decision maker’s notes for a practitioner's overview of Asset Recycling programs. To find more, check out the Section Overview and Content Outline, or Download the Full Report.

 

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Utilization of Proceeds in Asset Recycling

Options for utilization proceeds

The government entities may consider the following for utilization of proceeds from asset recycling:

  • Re-investment of proceeds in greenfield assets.

  • Re-payment of existing debt relating to the asset that is the subject of the asset recycling transaction (this would usually be a pre-condition of the lenders, unless the current lenders agree to continue their exposure to the project even after the private party takes over operations and maintenance of the project).

  • Meeting operational expenditure for existing assets; and

  • Provide financial support for technical assistance for future projects.

Considerations in utilization of proceeds

There are several considerations for utilization of proceeds from asset recycling:

  • A good practice for government could be to specify the application of the proceeds raised from implementing an asset recycling program. This should include providing clarity as to the intended investment program for new infrastructure asset to be developed as well as the amount that is to be re-invested. This will help in:

    • Defining priority assets.

    • Provide visibility in meeting the funding gap for new infrastructure assets.

    • Ensure transparency and accountability in the application of sales proceeds; and

    • Assess objectively and retrospectively the success of the program, and accordingly calibrate the implementation of the asset recycling program.

  • Re-investment within the Relevant Authority’s purview: The Relevant Authority may intend to retain the proceeds from asset recycling for re-investment in new/greenfield assets which are within the purview of the Relevant Authority. This mechanism incentivizes Relevant Authority to recycle assets to unlock capital.

  • Allocation of proceeds to a separate fund: The proceeds from asset recycling can be allocated to a fund that is separate and distinct from the Relevant Authority’s balance sheet. The application of the fund should be transparently specified so that the public can be assured of long-term value creation through the re-investment of the proceeds in infrastructure assets. In some jurisdictions, this approach is used to de-politicize the monetization and application of the proceeds through asset recycling programs by enhancing accountability and transparency.

  • Add to the strategic criteria for determining the use of proceeds:

    • Conforms to the Long-Term Strategy for Low Carbon and Climate Resilience 2050 and net zero pledges and the country’s Nationally Determined Contribution (NDC).

 

Box 10: Case Study on the Utilization of Proceeds from Asset Recycling

Utilization of proceeds of asset recycling by various jurisdictions: A range of options for utilization of proceeds from asset recycling, being practiced by various countries is presented below.

Countries
Sectors
Asset Recycling Model
Utilization of Proceeds
Australia

Ports, Energy, Roads, Land Registry

Sale and / or long-term lease of assets

  • Alleviate constraints for the funding of additional infrastructure

  • Re-investment of proceeds in greenfield assets

  • Re-payment of existing debts
India

Highways

Toll-operate-transfer (TOT), InvlT, Securitisation for brownfield highway assets

  • Re-investment of proceeds in greenfield assets and re-payment of existing debt
Brazil

Airports, rail and roads (predominantly airports)

Operations and Maintenance Concessions

  • Alleviate constraints for the funding of additional infrastructure Re-investment of proceeds in greenfield assets
Mexico

Highways and toll roads

Sale/ securitization through National Infrastructure Fund

  • Provide financial support for technical assistance for projects across multiple sectors
Turkey

Predominantly Airports

Lease and/or transfer of operating rights (TOR) model

  • Re-investment of proceeds in greenfield assets

Related Sections
Guidelines for Implementing Asset Recycling
Concession and Lease Models Infrastructure is pivotal to sustainable development with positive impacts on the economy… more
Case Studies in Asset Recycling
Find samples of Asset Recycling Transactions from around the world.             … more
Annex in Asset Recycling
The Guidelines are also supplemented with following Annex: Modules 1 to 4 set out sector-specific asset… more
Note/s:

The Guidelines have not been prepared with any specific transaction in mind and are meant to serve only as general guidance. It is therefore critical that the Guidelines be reviewed and adapted for specific transactions To find more, visit the Guidelines to Implementing Asset Recycling Transactions Section Overview and Content Outline, or Download the Full Report.

This is a new section of the website and is currently in draft form.  For feedback on the content of this section of the website or suggestions for links or materials that could be included, please contact the PPPLRC at ppp@worldbank.org.