joint technology initiative for clean coal eu financial instruments supporting the development of...
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Joint Technology Initiative for Clean Coal
EU Financial Instruments Supporting the Development of Technology Initiatives
Warsaw, 23 March 2007
Kim Kreilgaard
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Table of Content
RSFF Implementation Strategy
EIB Financing
RSFF Key Terms1.
2.
3.
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Risk Sharing Finance FacilityRSFF – Key Terms
FP7
OWN RESOURCES
EUR 1bn
RSFFprovisioning &
capital allocation
EUR 1bn
Eligibility
EIB Products
Beneficiaries
Size of Loans
Commission: R&D
EIB: R&D + I
Large Corporates,Mid-caps, SMEs, turnaround situations, infrastructure SPVs, Universities and PPPs
Corporate loans, project finance
Risk sharing bank facilities, funds that meet the RSFF credit profile
Reduced to min. EUR 7.5m for direct loans/guarantees
EUR 10bn in Financing Capacity
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Geographic Scope: EU 27 and Associated countries (Iceland, Liechtenstein, Norway, Switzerland, Israel, Turkey and Croatia)
Risk Sharing Finance Facility Eligibility
Industrial research
Pre-competitive development activity
EC Window - RTD & D1
Fundamental research
Definition stage / feasibility studies
Pilot and demonstration projects
EIB Window - RDI2
Innovation
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Key counterpart groupsRisk Sharing Finance Facility
Risk Sharing with Banks
NEW PRODUCT DEVELOPMENTS
Risk Sharing with Universities
Corporate /Project Finance
Financing R&D Consortia
• Targeted beneficiaries: SMEs & MidCaps(low/sub-investmentgrade)
• Product Ideas: RSFF Facilites; Interest Contingent Supplier Facility, Co-financing, Global Authorisations
• EIB value added: Banks: risk sharing, capital relief, new customers/cross selling, Beneficiaries: risk sharing, higher debt capacity, lower financing cost
• Targeted beneficiaries: Universities
• Product Idea: Royalty fund for scientific research projects
• EIB value added: Facilitate financing for universities, utilize royalty streams of research results (e.g. patents, lower financing cost
• Targeted beneficiaries: JTIs, Technology Platforms, EUREKA Joint Ventures,…
• Product Ideas: SPV based structures for individual R&D consortia
• EIB value added: Provide structuring know-how (Project Financing) and facilitate private sector funding
• Targeted beneficiaries: Mid-sized and large corporations (low/sub-investmentgrade),
• Product Ideas: Structured individual corporate loans for R&D projects (senior/junior debt, mezzanine)
• EIB value added: Lower Financing Cost, increase of debt capacity (in case of subordination), project risk sharing
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Table of Content
1.
2.
3.
RSFF Implementation Strategy
EIB Financing
RSFF Key Terms
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RSFF Implementation StrategyKey objectives
Extend EIB financing to new groups of counterparts through the introduction of new products RSFF Product Development
Develop co-financing and risk sharing with financial institutions for small projects / SMEs RSFF Facilities
Pursue a sector strategy in support of RDI investments in Collaboration with lead players, platforms and intermediaries. RSFF Sector Strategy
Collaborate with the Commission on financing FP7 projects Synergies with ETPs, EUREKA, ESFRI etc.
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Generating Projects and Portfolio Building RSFF Product Development : rationale for SMEs/ Midcaps
MidCaps/SMEs
SFF Financing (low/sub-investment grade)
for RDI projectsRSFF
Fin
anci
ng
Nee
ds
Co
mp
lem
enta
ry P
rod
uct
s
Limited debt capacity:equity gap/volatile cash-flows
Limited access to capital markets
Scarcity of capital is an obstacle for RDI / growth
Consolidation pressure +internationalisation
Extend Debt Capacity
Subordinated Debt/Mezzanine
Interest Contingent Loan
Extend Lending Capacity
Risk Sharing Facilities
Co-financing/leverage of mezzanine funds
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EIB
RO
LE
EIB is Privileged Bank in the dialogue for the development of ETPs, JTIs and ESFRIs
Core potential financier of low/sub-investment grade ETP, JTI, ESFRI member companies
BE
NIF
ITS
ETPs provide a wide range of key players for RSFF financing
ETP SRAs (Strategic Research Agenda) provides coherent framework for RDI financing
EIB can leverage its pan EU focus, sector knowledge, financial engineering and advisory capabilities to the benefits of ETPs, JTIs and ESFRIs.
Synergies with ETPs, EUREKA, ESFRI, etc.RSFF Implementation Strategy
ESFRIJoint Technology Initiatives
(JTIs)European Technology
Platforms (ETPs)
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Table of Content
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RSFF Implementation Strategy
EIB Financing
RSFF Key Terms
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Maximum loan amount: up to 50% of project cost.
Loan tenors: depending on the “economic life” of the investment (generally between 10 and 20 years; exceptions).
Interest Rate: Fixed or Variable
Minimum size per loan: > EUR 25m for investment grade financing
> EUR 7.5m under RSFF
< EUR 25m Intermediated Credit Lines
EIB Financing – Key termsGeneral EIB Terms and Minimum Requirements
…be eligible for EIB finance …be technically sound …be financially viable
…show accteptable returns…comply regulations (esp. environment/procurement)
…have adequate security
Projects should…
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General Overview on the EIBEIB Methods of Operation
Bank Intermediated Loans Bank Guaranteed Loan Direct Loan
EIB
CommercialBank(s)
Customer
EIB
CommercialBank(s)
Customer
CommercialBank(s)
Customer
Loan
Loan(s)
Loan Guarantee
EIB
Loan Loan
EIB lends to client’s house bank(s)passing through its low funding cost.Credit risk is born by the com. bank.
EIB provides financing directly to thecustomer alongside other lenders asappropriate. Credit risk is born by the guarantor.
EIB provides financing directly to thecustomer alongside other lenders asappropriate. Credit risk is shared on an equal basis with other bank(s).
e.g. Global Loan, Framework Loan
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The Risk Sharing Finance FacilityWhat can be financed
ELIGIBLE COSTS
€ 20m
Tim
e
Year 1
€ 10mYear 2
€ 30mYear 3
Total € 60m
€ 45m 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)
Up to 75% of the total project cost. Up to 75% of the total project cost.
Eligible project cost include: Eligible project cost include:
