dublin, 17 may 2017 - irish funds · 2017. 5. 19. · 19/05/2017 european investment bank group...
TRANSCRIPT
22 irishfunds.ie
Dublin, 17 May 2017
Investing for the future
Seminar on
Real Economy Investing
33 irishfunds.ie
Agenda
8:30 – 8:35 Welcome
8:35 – 9:05 EIB presentation
9:05 – 9:50 Panel session
9:50 – 10:05 Q&A
10:15 Closing remarks
19/05/2017 European Investment Bank Group
Real Economy Investing Seminar
European Investment BankCormac Murphy, Christopher Knowles, Barbara Boos, Benoit Dardenne
Dublin, 17 May 2017
The EIB: The EU Bank
• Natural financing
partner for the EU
since 1958
• Around 90% of
lending/investments
are within the EU
• Shareholders: 28 EU
Member States
Investing in
Europe’s growth
19/05/2017 European Investment Bank Group 5
EIB Group Financing in 2016: EUR 83.8bn
19/05/2017 European Investment Bank Group 6
SignaturesEFTA &
Enlargement Countries
EUR 3.35bn
Eastern Neighbours
EUR
1.65bn
Africa, Caribbean,
Pacific, South Africa
EUR 0.77bn
Asia and Latin
America
EUR
0.98bn
Southern Neighbours
EUR
1.63bn
European
Union
75.4bn
Outside EU
EUR 8.38bn
EUR
Total EUR 83.8bn
The World’s Largest Supranational Borrower
Europe 68%
Asia 19%
Americas 11%
Middle East & Africa 2%
19/05/2017 European Investment Bank Group 7
Total 2016 borrowing: EUR 66.4bn
Mobilising resources worldwide
We are the largest
issuer of green
bonds
EUR 3.8bn
in 2016
EUR 15bn
in 11 currencies
since 2007
We Deliver Impact Where It’s Needed
19/05/2017 European Investment Bank Group 8
JOBS4.4m jobs in small
businesses
HEALTH10m people with
access to improved
health services
EDUCATION890 000 students
benefiting from EIB
projects
WATER25m people
benefiting from
safe drinking water
TRANSPORT960m additional
passengers
ENERGY4m households
powered by EIB
projects
URBAN120 000 households
in social and
affordable housing
DIGITAL11m people with
new or upgraded
connections
19/05/2017 European Investment Bank Group 9
EIB lending instrument
For Investment Grade operations
Projects
Public Sector
Financing
Project Finance
Direct Loans
Intermediated
Loans
Project Finance
with direct
project risk
Risk SharingEquity & debt
through Funds
Banks
EIB special activities
For Low and Sub Investment Grade operations
The EIB’s Products
In 2016, the EIB financed €84bn of projects through an extensive range of
instruments at investment and sub-investment grades of risk.
The EIB Group Fund Activities
19/05/2017 European Investment Bank Group 10
Providing finance and expertise for
sound and sustainable investment
projects, including through
infrastructure and environmental
funds in Europe
Leading developer of risk financing
for innovative SMEs, including SME
private equity and venture capital
funds
EIB’s Rationale for Fund Investments
19/05/2017 European Investment Bank Group 11
1
2
3
4
Support fund managers investing in our target sectors in-
line with our policy goals (growth, climate & employment)
Jump-start first time fund managers or strategies in our
target sectors
Crowd-in private capital from co-investors at fund level
and debt at project level to maximise impact
Promote ILPA best in class practices in the fund industry
Our Catalytic Effect
19/05/2017 European Investment Bank Group 12
Fund investments demonstrate EIB’s catalytic effect & leveraging capacity
71.1bn12.6bn
1.8bn
As of Dec-16, EIB is
invested in 43 infrastructure
and environmental funds
Total capital raised
by these funds
Total on the ground
investment generated or to be
generated
The EIB’s Fund Activities
19/05/2017 European Investment Bank Group 13
Encouraging private and public sector commitment of
investment, project implementation and management
experience
Enhancing the investment market complements other
initiatives and additional sources of funding (including
institutional investors)
EIB’s fund investments are split amongst three main sectors and supplemented
by the EIF’s European SME activities
Infrastructure
Environment
SMEs in emerging markets
Others via EIF
Equity (and in limited cases debt) funds investing in infrastructure
projects that fulfill EIB’s eligibility criteria
Funds investing in projects promoting climate change mitigation
(e.g. renewable energy) or adaptation (e.g. irrigation projects)
SME private equity funds focusing on emerging markets
The European Investment Fund (EIF), an EIB subsidiary, invests in
European SME private equity and venture capital funds
2016 Key Figures for Fund(1) Investments
EIB commitments after 12 years of infrastructure and environmental fund activity:
46 funds in portfolio (41 inside the EU and 5 outside, 43 active and 3 exited)
Portfolio of €1.8bn EIB commitments in €17.8bn of funds
398 projects (active portfolio), 94 projects fully exited
(1) Infrastructure and environmental funds only
Underlying Projects by Geography Underlying Projects by Sector
14
UK14%
France9%
Germany9%
Poland9%Turkey
7%Italy5%
Ireland5%
Hungary4%
Finland3%
Spain3%
Others32%
Onshorewind18%
Roads13%
Health12%
Offshore wind8%
Solar6%
Energy efficiency
6%
Biomass6%
Media/Telecom
4%
Energy(non RE)
4%
Forestry4%
Others19%
19/05/2017 European Investment Bank Group
Irish Projects of EIB Invested Funds
EIB-backed funds have invested nearly €400m into projects located in Ireland
15
Project/Company Industry Fund carrying out the investment
Date of
Investment
Investment
(€m)
Foraois Growth Ltd* Forestry Dasos 2 Oct 2015 69
Glanaruddery Ireland** Onshore wind Impax New Energy Investors Apr 2015 27
Lettergull Ireland Onshore wind Impax New Energy Investors Mar 2015 1
N17/N18 Motorway Roads Marguerite 2020 Fund Apr 2014 20
Cork I (Luricawne Wind) Onshore wind HGCAPITAL Renewable Power Partners 2 Apr 2014 40
Cork 3 (Luricawne Wind) Onshore wind HGCAPITAL Renewable Power Partners 2 Apr 2014 45
Ireland Ballycadden Onshore wind Impax New Energy Investors Dec 2013 6
Galway 1+2 (Luricawne Wind) Onshore wind HGCAPITAL Renewable Power Partners 2 Sep 2013 15
Kerry I (Luricawne Wind) Onshore wind HGCAPITAL Renewable Power Partners 2 Dec 2012 33
Invis Energy development Onshore wind HGCAPITAL Renewable Power Partners 2 Sep 2011 78
Dundalk Roads DIF II Jan 2011 23
Irish Schools Education DIF II Jul 2010 16
Limerick Tunnel Roads Meridiam Infrastructure Fund Aug 2006 20
Total 395
Foraois Forestry Operations DFII School PPP Cork I Wind Farm
Additionally, the EIF has invested into 15 Irish SME funds and Co-Investment Vehicles and through its
various SME and venture capital fund investments, a significant number of Irish companies.
19/05/2017 European Investment Bank Group
• Independent fund manager
• Domiciliation in accepted jurisidiction
• No funds of funds
• Preferably no sub-funds, feeders or
umbrellas
• Closed end fund (wide range of tenors)
• Fund cannot be marketed to retail investors
Substantial portion of EIB eligible investments:
• Geography (EU + neighbouring countries) or
mandate specific for outside EU
• Greenfield or substantial capex
• Socio-economic and technical criteria
• Diversification limits (geography, sector,
asset)
• EIB investment of up to €150m
• Preference for investment at first close
• Commitment equal to10-20% of fund size
• At least one investor with matching
commitment
• Ability to do co-investments (up to €50m) is a
positive
Basic Checklist for Fund Selection
EIB looks for certain basic criteria when screening funds for potential investment
Structure Fund Investment Policy
EIB Commitment
1619/05/2017 European Investment Bank Group
Overview of main fund structures and jurisdictions (1)
Main domiciles of funds in EIB’s portfolio (not inclusive of outside EU and
prospective investments)
Main legal forms
19/05/2017 European Investment Bank Group 17
- Luxembourg (33)
- England (19)
- France (13)
- Netherlands (8)
- Investment companies (41 – including all 33 Lux funds)
- Limited partnerships (22 – including all 19 English funds)
- Mutual Funds (10 – all of which in France)
Overview of main fund structures and jurisdictions (2)
Limited partnerships
Most popular vehicle in anglo-saxon closed-ended fund universe
Structuring flexibility
Revamping of existing LP regimes in various jurisdictions
Removal of archaic mechanisms
Legal certainty and increased flexibility – safe harbour and LP clawback
Concrete effects in certain jurisdictions
Investment companies
Popular vehicle in (certain) civil law jurisdictions (e.g., SICAVs)
Consideration to be given to structuring flexibility
Contractual funds
(Historical) popularity in certain jurisdictions
Flexibility and substance
19/05/2017 European Investment Bank Group 18
EIB key structuring considerations (1)
EIB philosophy: delegation model with best in class governance approach
(appropriate balance between LP and GP rights)
LP Advisory Committee (with EIB’s presence)
Proper management of conflicts of interest (Advisory Committee, restrictions on cross-
over investments etc.)
Key persons dedication
Exclusivity / restrictions on successor funds
Ability to remove for and without cause
Alignment of interest
Change of control
Skin in the game
Fund as a whole incentivisation scheme of management team
19/05/2017 European Investment Bank Group 19
EIB key structuring considerations (2)
Limited liability
EIB to invest in funds protecting limited liability of investors
Legal opinion
Safe harbour for internal acts of management in modern LP regimes
Free transferability of interests / advance consent by GP/Manager to EU bodies
(problematic in structures with mandatory or contractual right of first
offer/refusal)
EIB consolidation prohibited
Maximum concentration limit
Absence of control (in particular if feeder or parallel vehicle)
19/05/2017 European Investment Bank Group 20
EIB key structuring considerations (2)
Standalone vs umbrella -- Strong preference for standalone structure
Reputational and AML/KYC risk
Allocation of costs
Governance
Bankruptcy remoteness
EIB integrity package
NCJ jurisdictions
AML/CFT provisions
Audit rights
19/05/2017 European Investment Bank Group 21
Closing remarks
Ireland is well suited to be a fund domicile for funds
Effective and proven legal structures
Sophisticated regulator
Established eco-system of advisers and service providers
Onshore jurisdiction with access to passporting
Historically EIB has not invested in Irish infrastructure and environmental funds
simply due to lack of opportunties
The General Partners/Fund Managers choose a fund’s domicile and should
therefore be the primary marketing target
Ireland has strong development opportunties lying ahead for its funds business
… and the EIB is looking forward to being offered Irish-domiciled fund
opportunities for investment
2219/05/2017 European Investment Bank Group
EIB in Ireland – Operational context
EIB office operational since early 2017
Strategic dialogue with government via working groups under Minister of
Finance
Excellent co-operation with state entities as natural partners – NTMA/NDFA,
TII, ISIF, EI, IDA etc.
EIB ready to step up activities (€1bn p.a.) in response to capital plan review
and other needs
Wide range of products and structures
Advisory and knowledge sharing from other EU markets
European Investment Bank Group 2319/05/2017
EIB Activity in Ireland
EUR bn 2013 2014 2015 2016
Approvals 877 946 800 737
Signatures 680 932 750 825
Disbursements 208 702 500 1000
European Investment Bank Group 24
Infrastructure30%
Environment12%
EFSI (Juncker
plan)15%
Innovation43%
EIB Track Record in Ireland
2016 split by sector
11 transactions:
• 2 project finance
• 2 universities
• 3 public sector (social housing, schools,
forestry)
• 3 corporates
• 1 fund
2016 split by transactions
19/05/2017
19/05/2017 European Investment Bank Group 25
Christopher Knowles
Head of Infrastructure
Funds & Climate Action
Operations Directorate
European Investment Bank
98, Boulevard Konrad Adenauer
L-2950 Luxembourg
8 Upper Mount Street
Dublin 2
For more information please contact:
Barbara Boos
Head of Infrastructure
Fund Investment team
Operations Directorate
Benoît Dardenne
Counsel, New Products,
Funds Unit
Legal Directorate
Cormac Murphy
Head of the EIB Group
Office for Ireland
Operations Directorate
2626
Moderator:
Panellists:
irishfunds.ie
Investment fund structures and real economy investing
Panel Discussion
Barbara Boos, Head of Infrastructure Funds, EIB
Benoit Dardenne, Counsel, EIB
Phil Doyle, Principal, Irish Infrastructure Fund, AMP Capital
Mark White, Partner, Head of Investment Management
Group, McCann FitzGerald
Peter Stapleton, Partner, Maples and Calder
Moderator:
Panellists:
2727 irishfunds.ie
Closing remarks
27