1 The European Fund for Strategic Investment and Trans-European Networks Representation of Saxony-Anhalt 1 European Investment Bank Group Monica Peña Sastre Policy Adviser, EIB Brussels Office 02.06.2015 EIB: The EU Bank • •European Investment Bank •2 Investing in Europe’s growth Natural financing partner for the Members States and EU institutions since 1958 Around 90% of lending is within the EU Shareholders: 28 EU Member States
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The European Fund for StrategicInvestment and Trans-European
Natural financing partnerfor the Members Statesand EU institutions since1958
Around 90% of lending iswithin the EU
Shareholders: 28 EUMember States
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Lending priorities 2014
03/06/2015European
InvestmentBank Group
3
EIB Group lending in 2014
03/06/2015 EuropeanInvestment
Bank Group
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28/02/2013 5European Investment Bank Group
EIB lending in Germany 2010-2014
Examples of EIB lending in Sachsen-Anhalt•IBSA KMU- und Mid-cap Darlehen, EUR 100 m credit line, 2014•Sachsen-Anhalt Forschung, EUR 400 m for public sector research, 2005• Otto Versand Neue Laender, EUR 77 m for the extension of a distributionfacility for a mail order business in Haldensleben, 2003•Zellstofffabrik Stendal, EUR 1bn for construction of a greenfield NorthernBleached Softwood Kraft Pulp (NBSKP) Mill in Saxony-Anhalt, 2003
Investment Plan for Europe: context
6European Investment Bank Group
The Investment Plan for Europe consists of three strands:1. Improved investment environment: regulatory and structural
reforms at EU and national levels for predictability, removingobstacles, aiming at a friendlier investment environment
2. Making finance reach the real economy: enhanced EIB-EC-MScooperation on project identification (the “Project Directory”)and stepped-up technical assistance / advisory
3. Mobilising finance for investment: The EFSI, via EIB, to betteraddress the current shortage of (higher) risk-financing in EU
Aim: to mobilise at least €315 billion in investment across the EU
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Pipeline of viable projects
Task Force EC-EIB-Member States:• Member States were asked to identify potentially viable
projects of European relevance to be realised in theshort and medium term
Identified around 2,000 projects across Europe worth someEUR 1.3 trillion of potential investments• Outcome: a forward-looking and transparent pipeline of
investable projects.• Purpose: to create confidence and encourage investors
to invest and build expertise in Europe
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No automatic financing by EC or the EIB for these projects
European Investment Bank Group
European Fund for Strategic Investments (EFSI)
8European Investment Bank Group
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Mobilising new investment
9European Investment Bank Group
EFSIEIBGroup
Eligible sectors
Wide eligibility criteria - Operations consistent with Unionpolicies that support any of the following general objectives:• development of infrastructure including in transport,
telecommunications, digital and energy infrastructure;infrastructure projects in the environment, natural resources,urban development and social fields
• research and development and innovation• investment in education and training, health, information and
communications technology• develop and modernise the energy sector, renewable energy,
security of energy supply and energy and resource efficiency;• financial support for mid-cap companies and SMEs.
European Investment Bank Group 10
EIB in charge of verifying that eligibility criteria are properly applied
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Eligible counterparts
Corporates of all sizes
Utilities
Public sector entities
SMEs (below 250 employees) or MidCaps (below 3,000
employees)
NPBs or commercial banks for intermediation
Dedicated investment platforms possible
European Investment Bank Group 11
EIB normal “know your customer” and compliance requirements
Eligible operations
Commercially sound
Economically and technically viable
Added value (additionality)
Investments boosting employment and growth
Bank intermediation is possible
Pricing commensurate with the risk – no subsidy element
European Investment Bank Group 12
- Typically higher risk profile than normal EIB’s normal operations- Risk-absorbing products to foster the implementation of additional
projects and to support the development of SMEs and MidCaps
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How will the EFSI operate?
All operations are EIB or EIF operations EIB and EIF normal appraisal and processes apply EIB governing bodies approve every operation
European Investment Bank Group 13
- If you know the EIB, get in touch with your normal contact person- If you do not, go on EIB’s website and find the individual in the
Operations Department responsible for the Member State where theproject is located or where your company is located
- If in doubt, check out the EIB web page or contact the EIB InfoDesk
European Investment Bank Group 14
Project promoters Public authorities Member States Private sector
Project support (JASPERS,project preparation andimplementation support)
New investment supportalso in areas relevant to thescope of EFSI (could bedelivered by EIB advisory oroperational teams)
Identification of needs asthey arise
Network of institutions incl.EIB Group, EC, NationalPromotional Banks, etc.
Integrated collaborationmodel
Additional advisoryand technicalassistance
EIAH’s partnerinstitutions’ expertise
•Web content + Web portal + Help Desk team
Managed by EIB in partnership with EC
European Investment Advisory Hub (EIAH)
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28/02/2013 15European Investment Bank Group
EIB financing solutions
Public/PrivateSector
28/02/2013 16European Investment Bank Group
•CEF(EIB/EC)•Instruments
•CEF(EIB/EC)•Instruments
•ProjectFinance•ProjectFinance
•Corporates•Corporates
•PBCE•PBCE
•Guarantees•Guarantees
•SeniorCorporate•SeniorCorporate
•Subordinated Corporate•Subordinated Corporate
•Capital markets•Capital markets
•Banking market•Banking market
•Airports•Airports
•Ports•Ports
•Public Utilities•Public Utilities
Greenfield InfraProjects
Corporates
Products
•Senior Loans•Senior Loans
•Subordinated•Loans
•Subordinated•Loans
The CEF toolbox of Debt Financial Instruments
Public/Private Sector
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CEF Debt Financial Instrument Toolbox
Credit Enhancement of Project Bond (PBCE)Example: Enhancement of the bond issue for gridconnection project (such as Greater Gabbard/Gwynt y Morprojects in UK)
Credit enhancement of Bank Loans (subordinated or asa guarantee)Example: Credit enhancement of bank loans to a PPProads project, such as enhancement of a bond issue plusbank finance for the A7 motorway PPP project Germany
Senior/Subordinated loans or Guarantees forCorporatesExample: Subordinated debt to a TSO to supportborrowing capacity for new investments and expansion
EuropeanInvestment
Bank
17 28/02/2013 18European Investment Bank Group
CEF Debt Instrument and EFSI
• The new EFSI is complementary to the CEF Debt
Instrument, but will target a wider range of sectors
• Wider more flexible range of financial products for all sub-sectors (e.g.
EE/RE in energy, urban transport)
• High level of resources available (e.g. energy and ICT in PBI pilot
phase)
Possibility to use EFSI/ESIF resources to boost existing instruments (e.g.
EEEF or PF4EE)
Challenge remains pipeline identification and project preparation
EFSI and TENs
28/02/2013 20European Investment Bank Group
Pipeline identification activity along several strands: Direct engagement with Sponsors and Investors: identification of
financing needs and scope for EIB financing
Coordinating with DG ENER/DG MOVE/DG CONNECT: on PCIsto identify opportunities / need for EIB financing
Engagement with Corridor Groups/Coordinators: focus linked tocorridor priorities and project readiness
Screening of Investment Task Force list for potential EIBfinancing (with EFSI/non-EFSI resources)
Discussions with INEA to identify projects not successful in thecurrent CEF call but with potential for EIB financing
EIB pipeline development initiatives
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28/02/2013 21European Investment Bank Group
EIB lending to transport
Usually between 20 – 25% of total EIB lending
Recommendations for TEN-T projects
28/02/2013 22European Investment Bank Group
• Emphasise importance of European dimension and selection processbased on system analysis, prioritisation, value-for-money and demand /economic analysis
• Transport capacity should consider phasing with demand / technicalstandards / funding – [single vs double track rail, ½ profile vs full profileroads]
• Rehabilitation and upgrading of existing assets increasingly important inmature corridors
• Coordination and utilisation between transport modes, corridors andcountries for better use of resources e.g. between passenger and freightrail
• Allow for proper planning with proper risk allocation between public andprivate sector
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Project examples
28/02/2013 23European Investment Bank Group
Project Bond- A7 motorway Germany• First PBI project in Germany – signed 26 August
2014 and second greenfield project
• PPP project (A-Model program) for the upgradeof a major motorway subject to high congestionsand bottlenecks (widening of 65 km of motorway)
• EUR 430m, 29-year amortizing Bond (purchasedon a deferred basis)
• PBCE of EUR 85m to provide creditenhancement from BBB to A-
• Priced at swaps + 140bp
• The PBCE solution proved to be morecompetitive against bank debt structures andunwrapped bond solutions
Cost of NGA Capex for DA 2020 scenarios
ProjectsDirectorate |
Digital
21/01/2015
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European population density and total cost of DAE targets
•Urban•(> 500
inhab. Perkm2)
•Suburban•(500-100 inhab.
Per km2)
•Rural•(<100 inhab.
Per km2)
•50%
•20%
•30%
•30%
•50%
•20%
•% of total EU population•% of total EU wide FTTHcost
•Sha
re o
f inh
abita
nts
and
FTTH
cost
• 50% of the European population livein urban areas and additional 30% insuburbs
• Building a nation-wide NGN networkin Europe would cost aroundEUR 220 bn*
• 20% of this cost is required tocover 50% of Europeanpopulation in urban areas
• 50% of this cost is required tocover the 20% of Europeanpopulation in rural areas
• Market operators are investing inurban and partly suburban areaswhich are already well covered withcopper/cable infrastructures
•* Based on consultancy assignment commissioned by the EIB
ProjectsDirectorate |
Digital
21/01/2015
• EIB funding prerequisites
• Projects must be:
• Technically sound
• Financially viable
• In compliance with regulation
• Show acceptable economic return
Financing options by market segments
•Black Areas
•Estimated total investments around EUR 220 bn until 2020* - on average c. 50% of the total market cap for the sector
•Black areas
•Grey + White
•Certain Grey•Areas
•White & Certain Grey Areas•Government funding plus “New risk-sharing instruments” ormodified existing ones will be needed to make themamenable for EIB funding.
•Source: EIB estimates•* Varying according to assumptions•** Black areas estimates based on industry forecasts
ProjectsDirectorate |
Digital
21/01/2015
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• Europe needs and can tackle the investment gap in Europe
• Investment requirements for broadband in excess of EUR 200 bn
• A substantial part of the investments have insufficient financial profitabilityfor market oriented investors, especially in non-urban areas
• Role of promotional banks in redressing certain incentives for long terminvestments
• Need for investment friendly regulatory environment
• Scope for public sector in generating critical demand (e.g. e-government,e-health) and new instruments for procurement (pre-commercialprocurement)
Conclusions
ProjectsDirectorate |
Digital
21/01/2015
Examples of recent FTTx projects
•Deutsche Telekom•(Germany)2012 / 2013
• EIB loan: EUR 300 m(Project 1), EUR 450 m
(Project 2)
•Deutsche Telekom•(Germany)2012 / 2013
• EIB loan: EUR 300 m(Project 1), EUR 450 m
(Project 2)
•Iliad SA•(France)
•2009 / 2012
•EIB loan: EUR 150m(Project 1). EUR 200m
(Project 2)
•Iliad SA•(France)
•2009 / 2012
•EIB loan: EUR 150m(Project 1). EUR 200m
(Project 2)
•Breitband Schleswig –•Holstein
•(Germany)•2010
•EIB loan: EUR 125 m(intermediated by IBSH)
•Breitband Schleswig –•Holstein
•(Germany)•2010
•EIB loan: EUR 125 m(intermediated by IBSH)•Reggefiber Group B.V.
•(The Netherlands)•2010 / 2012
•EIB loan: EUR 130 m(Project 1), EUR 140 m
(Project 2)
•Reggefiber Group B.V.•(The Netherlands)
•2010 / 2012
•EIB loan: EUR 130 m(Project 1), EUR 140 m
(Project 2)
•RAIN Rural Broadband•(Lithuania)
•2012
•EIB loan: EUR 9.1 m (co-financing with structural
funds)
•RAIN Rural Broadband•(Lithuania)
•2012
•EIB loan: EUR 9.1 m (co-financing with structural
funds)
•SONAECOM• (Portugal)
•2010
•EIB loan: EUR 75 m
•SONAECOM• (Portugal)
•2010
•EIB loan: EUR 75 m
•M-Net Breitband Munchen•(Germany)
•2009
•EIB loan: EUR 100 m
•M-Net Breitband Munchen•(Germany)
•2009
•EIB loan: EUR 100 m
•Fastweb•(Italy)
•2009/2013
•EIB loan: EUR 350 m(Project 1), EUR 350 m
(Project 2)
•Fastweb•(Italy)
•2009/2013
•EIB loan: EUR 350 m(Project 1), EUR 350 m
(Project 2)
•Świętokrzyskie RegionalInfrastructure
(Poland)•2013
•EIB loan: EUR ~2 m(co-financing with structural
funds)
•Świętokrzyskie RegionalInfrastructure
(Poland)•2013
•EIB loan: EUR ~2 m(co-financing with structural
funds)
•AXIONEINFRASTRUCTURES
•(France) 2014
•EIB loan: EUR 58 m(Project Bond Initiative )
•)
•AXIONEINFRASTRUCTURES
•(France) 2014
•EIB loan: EUR 58 m(Project Bond Initiative )
•)
ProjectsDirectorate |
Digital
21/01/2015
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28/02/2013 29European Investment Bank Group
Project Bond- Axione Infrastructure France• First PBI project in the broadband sector and first PBI project in France• Financing of a holding company gathering 11 broadband projects currently in
operation• EUR 190m, 11-year amortizing Bond• PBCE of EUR 38m; providing credit enhancement from BB+ to BBB (1.5 notches).
Priced at swaps + 160bp• The PBCE solution proved to be significantly more competitive against bank debt
structures• Positive feedback from bond investors; EIB did not act as bond investor
Project examples
28/02/2013 30European Investment Bank Group
9%
31%
39%
11%
0%9% 1%
Energy Efficiency
Renewable Energy
Electricity Networks
Gas Networks
Thermal Power
Gas Production
Other Security ofSupply
On average 15-20% of EIB total yearly lending
In 2014 energy loans of over EUR 13 bn
Recent Energy Review prioritises ‘no regrets’ sectors: energy efficiency,renewable energy, networks and RDI in energy
EIB lending to energy projects in 2014
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First electricity interconnection linkingGreat Britain (Isle of Grain) and theNetherlands (Maasvlakte).
Amongst the first examples of marked-based interconnector in the EU.
Bipolar HVDC link with rated voltage of± 450 kV and rated continuouscapability of 1000 MW. Route length254 km, of which 245 km undersea.
EIB loan of EUR 150 million to Tennet. Improving diversification and security
of supply and enhancing electricitymarket integration.
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•NSOG – BritNed Interconnector
Other major EIB-financed projects in the Region: EWIC (Ireland-Great Britain), HVDC link having 500 MW capacity and route length 256 km.
EIB loan of EUR 250 million to EirGrid. German offshore HVDC links: HelWin1 (576 MW, 130 km), SylWin1 (864 MW, 205 km) and
DolWin1 (800 MW, 165 km). EIB loan of EUR 500 million to Tennet. Western Link (Scotland-Wales), HVDC link having 2250 MW capacity and route length 420
km. EIB loan to National Grid.
European Investment Bank 32European Investment Bank Group