European Investment Bank EIB Participation at the International experts workshop: “Assessing the economic competitiveness of the European Automotive Embedded Software industry” Andres Gavira Etzel Brussels 28th April 2010
Jan 19, 2016
European Investment Bank
EIB Participation at the International experts workshop: “Assessing the economic competitiveness of the European Automotive Embedded Software industry”
Andres Gavira Etzel
Brussels 28th April 2010
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Outline
Introduction of EIB
The ECTF
The Impact of the Crisis on the Semiconductor Industry
The RSFF
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European Investment BankProfile
EIB was created by the Treaty of Rome in 1958
EIB is a not-for-profit, policy driven institution
EIB is 100% owned by the 27 EU member states
EIB has subscribed capital of EUR 232.4 bn as of 2009
EIB is AAA rated
EIB funds itself on the capital markets: EUR 79.4 bn in 2009
EIB signed loans amounting to EUR 79.1 bn in 2009
EIB is the largest multilateral financing institution
The European Investment Bank is the European Union‘s long-term financing institution. The
Bank acts as an autonomous body set up to finance capital investments furthering European
integration by promoting EU policies.
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Dec 2008 – Dec 2009
Loans approved: EUR 8.7 bn, of which:
1. ECTF: EUR 4.8 bn
2. OEMs: 84%; suppliers: 16%
Size of supported investment programmes: EUR 28 bn
EIB has become the largest R&D financier of the European automotive sector
EIB Lending to the Automotive Sector
0
3
6
9
2007 2008 2009EUR bn
EIB lending to the automotive sector
8.2 bn
1.5 bn1.7 bn
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The ECTF programme – scope & objectives
EIB’s “European Clean Transport Facility” (ECTF)
Objective: “...support investments targeting (Green Cars):Research, Development and Innovation;
emissions reduction; and
energy efficiency.”
Beneficiaries: OEMs & suppliers in the main transport sectors: Automotive
Aircraft
Rail
Maritime
Lending volume: EUR 8 bn in 2009/2010
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ECTF Outlook ...
EIB lending to the sector will continue in 2010
Risk appetite of commercial banking sector remains limited
Bond market offers easier access for the better rated companies, others (if any) may only place high-yield bonds
Strict focus on:R&D for low emission technology & safety ICT has a key role!
Facilities for small car platforms in convergence areas
Development activities of automotive suppliers ICT has a key role!
The link to ICT
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ICT Policy Context
Semiconductors are the basis for ICT. ICT elegibility comes through the Knowledge Economy objective. Investment concerns:
R&D
Innovative production facilities
Adoption of innovative products/processes
EIB is technology / product neutral. Investments cover the
complete semiconductor eco-system (IDM’s, equipment suppliers,
research institutes, etc.)
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EIB Lending to ICT Sector
Semiconductors15%
Fixed broadband36%
R&D14%
Economic Development
15%
Satellite7%
3G13%
EUR 3.0 bn in 2008
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What is different with this crisis?
Crisis has had an unprecedented, deep impact on semiconductor sector
Will lead to an international redistribution of production
Europe will have to react to this swiftly
Green shoots are emerging, opportunities are out there:
Investment needs for broadband, green technologies, to assist demographic change
Europe has long R&D traditions and favourable political environment
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Sources for funding of investments
Cash flow (adversely affected by current market environment)
Equity (expensive in current environment)
Debt (difficult due to de-leveraging efforts)
Subsidies (competition with other more visible sectors)
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Risk Capital1 CIP Resources (SME)2 RSFF (SME / MidCap)3
Entrepreneur, friends, family
Business Angels
Seed/Early Stage VC Funds
Formal VC Funds
Bank Loans and Guarantees
Seed / Start-Up Phase Emerging Growth Phase Development Phase
Investment Loans4
Later Stage
Counterparts
EIB and EIF financing tools
Investment Loans
RDI financing
MidCaps/ Large Corporates/ Public Sector Entities (investment grade)
Loans, Guarantees
RSFF
RDI financing
SMEs/MidCaps, Banks, PE Investors (sub-investment grade)
Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks (Investors)
CIP Guarantee schemes
Growth financing for SMEs
Formal VC Funds
SME guarantees (loans, microcredit, equity/mezzanine, securitisation
Facility: High Growth Innovative SME Scheme (GIF), Ecotech
Purpose: IP financing, technology transfer, seed financing, investment readiness
Target Group: VC Funds, Business Angels
EIF Product: Fund-of-Funds
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Bank Guaranteed Loan
EIB
CommercialBank(s)
Customer
Loan Guarantee
Direct Loan
CommercialBank(s)
Customer
EIB
Loan Loan
Bank Intermediated Loans
EIB
CommercialBank(s)
Customer
Loan
Loan(s) (< 12.5m)
EIB Financing SolutionsTypical EIB financing modes
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EIB Loans
Long Term Tenor
Attractive Pricing
EIB does not sell assets on the secondary market (buy and hold strategy)
Signalling Effect: EIB as a quality stamp
Minimal loan size EUR 12.5 million (= minimal project size of EUR 25 million)
Traditionally, investment grade projects
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Risk Sharing Finance Facility – Set-up
Own Resources
EUR 1 bnRSFF
[up to EUR 10 bn assuming
leverage of 5.0x ]
Direct Lending Indirect Lending / Financing
European Commission
EUR 1 bn
Corporate LendingSenior SecuredSecond LienSenior UnsecuredJunior UnsecuredPIK loansMezzanine, etc.
Project FinancingUniversitiesOther: SPVs, PPPs, JTIs…
Financial Intermediaries
(extend lending capacity)
Risk Sharing
Co-financing
Investment Funds
Renewable Energy
Others
Collaboration with EIF
Banks
Funds
1 2
3
4
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The EIB Project Approach
ELIGIBLE COSTS
€ 20 m
Tim
e
Year 1
€ 10 mYear 2
€ 30 mYear 3
Total € 60 m
€ 30 m MAX. EIB LOAN
• Facilities: project capital expenditures for tangible assets
• Activities: project capital expenditures for intangible assets, research staff cost, incremental working capital needs and other related operating expenses
• Facilities: project capital expenditures for tangible assets
• Activities: project capital expenditures for intangible assets, research staff cost, incremental working capital needs and other related operating expenses
R&D budgets typically cumulated over 3 years (investment programme)
R&D budgets typically cumulated over 3 years (investment programme)
Generally up to 50% (exceptionally up to 75%) of the total project cost
Generally up to 50% (exceptionally up to 75%) of the total project cost
Eligible project cost includes: Eligible project cost includes:
What can be financed? An example
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Summary
ECTF for low emission technology & safety
Financing of ICT fits into EIB´s policy
RSFF for financing of sub-investment grade RDI projects
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Andres Gavira EtzelSenior EngineerICT & e-Economy Division
Phone: (+352) 4379 82634email: [email protected]
European Investment Bank100, boulevard Konrad AdenauerL-2950 Luxembourg