aecm annual event 2015 - alessandro carano
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1
EU growth benefitting from economic tailwinds
Low oil, low Euro, QE , broadly neutral fiscal stance
Boost for an otherwise mild cyclical upswing
GDP expected +1.8% in 2015; +2.1% in 2016
Labour markets are slowly improving but unemployment
remains high in certain countries
Inflation expected to recover later this year
Medium-term outlook still affected by structural and
crisis-related weaknesses
EU Economic context
2
• Six months into a new five year mandate
• New Commission led by President Juncker
• New focus, new structures
EU Political context
3
EU Investment Plan: rationale
EU investment & competitiveness gap
High liquidity in the market
Public budget constraints
Financial and non-financial barriers to investment
EU Investment Plan
EU/MS policy action + EU budget +
EIB capacity to mobilise private
sector funds towards strategic
investments.
4
The challenge of boosting investment
3,039
2,527 2,543
2,528
2,567
2,640 2,717
3,021
2,657
2,714
2,659 2,647
230
370
Gap compared to sustainable trend
2,869
"Sustainable" trend of investment assuming a share in GDP of 21-22%
2,416
2,606
6
Boost investment in strategic projects and
access to finance via the European Fund for
Strategic Investment (EFSI) – EIB/EIF
Cooperation with National Promotional Banks
and the EIB
1. MOBILISING FINANCE FOR INVESTMENT
Investment Project Portal
European Investment Advisory Hub:
technical assistance
2. MAKING FINANCE REACH THE REAL ECONOMY
Predictability and quality of regulation
Removing non-financial, regulatory barriers
in key sectors within EU Single Market
Structural reforms at national level
3. IMPROVED INVESTMENT ENVIRONMENT
EU Investment Plan: 3 pillars
7
Better and more predictable regulation at all levels Capital Markets Union Making most of the Single Market
Energy Union Digital Single Market Services Market Better implementation and enforcement
Structural reforms in the Member States Openness to international trade and investment
3. Improved investment environment
8
Building a dynamic pipeline of viable projects European Investment Project Portal Matching investment opportunities proposed by project
sponsors with investors' interest Strengthening advisory services European Investment Advisory Hub (EIAH) – EC/EIB/MS Technical assistance Pooling resources & expertise
2. Making finance reach the real economy
9
2a. European Investment Project Portal
• Bridge between EU's investment opportunities and
potential investors.
• A web portal enables EU-based project promoters (public
authorities, private, PPP) to share their investment
proposals seeking external financing, in a transparent
way.
• Investors can search for opportunities across Europe
(size, sector, geography).
• Effective form of presenting new project ideas to the
market (G20/ OECD experience).
10
2b. European Investment Advisory Hub
• A single access point to a wide range of advisory services.
• Strengthened advisory support throughout the project cycle: project identification, preparation and implementation incl. the use of financial instruments, advice on structuring and implementing public-private partnerships and facilitation of access to finance.
• A cooperation platform – a peer-to-peer exchange and sharing of know-how regarding advisory services.
The Hub: a gateway to
• Targeted advisory support for project development.
• Technical capacity building.
• Expert guidance from experienced financial & technical professionals.
• Information and knowledge sharing
The Hub seeks to improve project quality and be the reference point for project advisory support in Europe.
11
1. European Fund for Strategic Investment (EFSI)
EU guarantee € 16bn
Infrastructure & Innovation window
Long-term investments € 240 bn
SMEs and mid-cap firms € 75 bn
SME window
EFSI € 21 bn
Total over 3 years: € 315 bn
EIB financing EIF financing
€ 5bn
12
Infrastructure and Innovation window
SOURCES OF FUNDING
TYPICAL PRODUCTS OFFERED
FINAL RECIPIENTS AND TYPICAL PROJECTS
Long-term senior debt for higher
risk projects
Equity and quasi-equity
Subordinated loans
Other
investors
join in on
a project
basis
Transport infra
Energy infra Broadband
infra
Energy Resource efficiency
Renewable energy Research
Education
Innovation
SMEs
Long-term investment
funds
The Fund
serves as
credit
protection
for new EIB
activities
European Fund
for Strategic Investments
13
SMEs and mid-cap window
SOURCES OF FUNDING
TYPICAL PRODUCTS OFFERED
Guarantees European Fund
for Strategic Investments
FINAL RECIPIENTS AND PROJECT EXAMPLES
SME e.g.
micro-loans to a SME
Venture Capital
Growth finance
Securitisation
Mid-cap company
e.g. equity in a
start-up
e.g. loans for R&D project
e.g. venture
capital for a
prototype
The Fund
serves as
credit
protection
for new EIF
activities
Other
investors
join in on
a project
basis
14
Key features of EFSI /1
• Focus on investments in real economy
• Results on growth and jobs
• Market-driven, no political interference
• No geographic or sector pre-allocation
• Support to EU policies
• Leverage / crowd-in private sector and third parties
• Economic and technical viability
• Additionality vs existing instruments
• Higher risk-taking than EIB normal activity in EFSI timeframe
15
Key features of EFSI /2
• Size of investments
• EIB uses min €25m for individual loans
• Smaller schemes can be grouped into framework loans
• No size restriction for operations via Fin. Intermediaries (eg for SMEs)
• Cross-border
• Investments between a partner in MS and extending to countries in PreAccession and Neighbourhood can be covered by EFSI
16
Opportunities for promoters/investors
Projects
• Cofinancing / Risk-sharing with EIB/EIF
Investment Platforms
• Pooling of projects with thematic or geographic focus
• Agreement or Fund
• Can benefit from EU Guarantee via EIB
• Cooperation with EU National Promotional Banks
17
EFSI project cycle
• Project promoters present proposal to EIB/EIF directly
• EIB/EIF due diligence
• EFSI Investment Committee approval of EU guarantee
• EIB/EIF Board approval
• Signature
• Financing
• Implementation and monitoring
18
EFSI project cycle
• Project promoters present proposal to EIB/EIF directly
• EIB/EIF due diligence
• EFSI Investment Committee approval of EU guarantee
• EIB/EIF Board approval
• Signature
• Financing
• Implementation and monitoring
19
EFSI Governance
• EFSI Investment Committee (8 independent experts)
• Decisions on use of EU guarantee for each operation based on Investment guidelines
• EFSI Steering Board (EC/EIB)
• Strategic orientation
• Policy setting
• EFSI Managing Director
• Daily management
20
• Bioscience R&D (Spain) € 240m • Primary care PPP (Ireland) €140m • Airport expansion (Croatia) € 246m • Industry modernisation (Italy) € 227m • Renewable energy (Denmark) € 2bn • Energy efficiency in buildings (France) € 800m • Gas transmission (Spain) € 326m • Pulp production upgrade (Finland) € 1.2bn
EIB started approvals since Apr-2015
21
• Bioscience R&D (Spain) € 240m • Primary care PPP (Ireland) €140m • Airport expansion (Croatia) € 246m • Finance for SMEs (France, Portugal, UK, Luxembourg,
Italy and Germany) € 1 300m • Industry modernisation (Italy) € 227m • Renewable energy (Denmark) € 2bn • Energy efficiency in buildings (France) € 800m • Gas transmission (Spain) € 326m • Pulp production upgrade (Finland) € 1.2bn
EIB Group started approvals since Apr-2015
22
Status and next steps
Status
• EFSI regulation approved by June.
• 10 projects have already received EIB pre-financing.
• EIAH operational by June.
Next steps
• Project can be submitted to EIB/EIF for EFSI financing.
• EFSI operational by Sep 2015.
• European Investment Project Portal operational by end 2015.
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