european investment bank financing of european … - ws...8. debt and mezzanine debt product...

Structured Finance & Advisory | European Investment Bank

European Investment BankFinancing of European Research, Development and Innovation (RDI)

SET Plan Financing Workshop

June 20-21, 2011Brussels

Structured Finance & Advisory | European Investment Bank 2

European Investment BankDisclaimer

This Presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by the European Investment Bank (“EIB”). The terms and conditions are intended as an outline for discussion purposes only and made on an indicative basis. All figures set forth in this Presentation are subject to change, to a satisfactory due diligence and to all necessary internal approvals of EIB (in particular of its credit committees).

The information in this Presentation reflects the prevailing conditions and the view of EIB as of this date and are accordingly subject to change and based on carefully selected sources believed to be reliable. EIB has not independently verified this information and does not make any representation or will be liable that such information is accurate, valid, timely and complete.

This Presentation is provided without any liability whatsoever by EIB and shall not constitute any obligation of EIB to extend credit facilities to the Company or to carry out a due diligence review of the aspects relevant for the financing of the Project.

Neither this presentation nor any of its contents may be duplicated, published or used for any other purposes without the prior written consent of EIB.

European Investment Bank


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 subscribed capital was EUR 232.4bn as of 2010

EIB is AAA/Aaa rated by Moody’s, S&P and Fitch with stable outlook

EIB funds itself on the capital markets: EUR 67.0bn in 2010

EIB signed loans amounting to EUR 72bn in 2010 (c.90% in EU)

EIB is the largest multilateral financing institution

Total portfolio of loans EUR 451bn as of 2010

EIB is the majority shareholder in the European Investment Fund

For more information, please visit: www.eib.org

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 integrationby promoting EU policies.


European Investment BankPolicy Objectives and Lending Statistics for 2010

Policy Objectives within the European Union:Cohesion and convergence

Small and medium-sized enterprises (SMEs)

Environmental sustainability

Knowledge Economy

Trans-European Networks (TENs)

Sustainable, competitive and secure energy

SET Plan links to all objectives

Lending Statistics 2010:– Convergence: EUR 29.3bn

– Knowledge Economy: EUR 16.5bn

– Trans-European Networks (TENs): EUR 10bn

– Small and Medium Enterprises: EUR 10.8bn

– Environmental protection and sustainable communities: EUR 28.7bn

– Sustainable, competitive and secure energy: EUR 14.8bn


EIB contribution to energy & climate change focuses on six priority areas:

renewable energyenergy efficiencyresearch, development and innovation (RDI) in energysecurity and diversification of supply trans-European energy networks (TEN-E)carbon financing

EIB Contribution to EU Policy Objectives in the field of Energy and Climate Change


EIB Group Product Offer

Risk Capital CIP Resources (SME) RSFF (SME / MidCap)

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

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

Competitivness and Innovation Program (CIP) Guarantee schemes

Growth financing for SMEs

Formal VC Funds, CLOs

SME guarantees (loans, microcredit, equity/mezzanine, securitisation)

RSFF, RSI (RSFF for SMEs; new product in development)

Innovation financing

SMEs/MidCaps, Banks, PE Investors (sub-investment grade)

Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks

Special Operations

Investment Loans

Investment Loans

RDI financing

MidCaps/Large Corporates/Public Sector Entities(investment grade)

Guarantees

Special Operations

Later StageCounterparts

EIF EIB


Structured Finance Facility (SFF) and Risk Sharing Finance Facility (RSFF): to fund projects with a higher risk profile and enable equity financing; mezzanine and guarantee operations for infrastructure schemes

Investments in Equity Funds: EIB invests in equity funds, e.g. Marguerite, which in turn take direct equity participations in infrastructure investments

NER300: Joint Action Programme with the European Commission to provide grants to Low Carbon and Renewable projects under the Revised Emissions Trading Directive. Implementing first calls from 2011.

European PPP Expertise Centre (EPEC): Expertise service provided by the EIB and European Commission to support programme and policy development as well as best practice by the public sector for PPP transactions.

Joint Assistance to Support Projects in the European Regions (JASPERS): a joint policy initiative of EIB, DG REGIO, EBRD and KfW to provide assistance for absorption of Structural & Cohesion Funds period 2007 to 2013

EIB Instruments for SET Plan projects in addition to “standard”(inv grade quality) EIB loans


European Investment BankFinancing Models and Concepts

Corporates Project Finance Public Sector OtherThe project is defined and EIB is financing up to 50% of the eligible project costs but on the balance sheet of the promoter, i.e. the ability of the company as a whole to service debt is the main driving factor in the process along with the proposed structure of the facility.

EIB also finances corporates indirectly usually via third-party financing institutions (non-RSFF).

The project is structured as a ring-fenced operation with limited or no recourse to the promoters. The quality of the assets and their ability to generate cash are vital for such type of operations.

PF operations could be full-risk (RSFF), or guaranteed (banks, corporates monolines, governments), secured, PPPs…

Project may be supported indirectly via EIB facilities extended to member states and local governments

Infrastructure funds

Advisory services

Other initiatives


Direct RDI Financing - The Risk Sharing Finance Facility (RSFF)

EIB has prioritised investment in research, development and innovation (RDI) as it is one of the key factors necessary to improve competitiveness and ensure long-term economic growth and employment in Europe.

Investment in RDI is a key EU priority, as Europe has set the medium-term goal of becoming the most competitive and dynamic knowledge-based economy in the world.

RSFF provides substantial additional debt finance to complement more conventional sources of finance such as grants, equity and loans, to finance high value-added high-risk investments covering the full range of RDI, and is available in EU-27 + FP7 associated countries.

RSFF is being implemented in cooperation between the European Commission and the EIB, each of which have provided EUR 1bn capital each to cover the risks borne by the EIB when financing RDI projects under RSFF for the period 2007-2013.

RSFF has shown excellent results to date and by the end of 2010, 3.5 years since RSFF was launched, loans worth almost EUR 8.8bn, (88% of the total RSFF facility) will have been approved and loans of almost EUR 6.3bn (63% of total) will have been signed.


Banks

EIB RSFF funds is a debt based instrument to complement other sources of debt funds available for low/sub investment grade RDI intensive corporates and project finance transactions

EIB RSFF funds are highly attractive for potential beneficiaries because of:

1. Highly attractive terms & conditions (AAA rating and non-for-profit pricing)

2. Long maturities of up to 10 years or more

3. Direct EIB participation of up to EUR 300m per transaction (depending on rating)

4. Strong technology/industry expertise

5. EIB does not sell assets on the secondary market (buy and hold strategy)

6. No cross selling (just long-term lender)

7. Signalling Effect: EIB as a quality stamp

8. Debt and Mezzanine Debt Product

Investors

Final BeneficiariesLow/Sub Investment Grade

(BBB- and below)

EIB (RSFF)2007 - 2013

EUR 1bnEUR 1bn

Approx. EUR 10bnDebt Financing

Own Resources

Direct RDI Financing - Risk Sharing Finance Facility (RSFF)


European Investment BankNew Financial Instruments 2014-2020

2. Demand Driven

3. Simple to Implement andMonitor

1. Responding to EC 2020Objectives

4. Leverage EC Funds5. Optimise EIB Capital Allocation

Smart

Sustainable

Inclusive

Growth:


European Investment BankFinancing Models and Concepts: 2014-2020

Potential new instruments / initiatives relevant for SET-plan financing:

Enhanced Risk Sharing Finance Facility (RSFF)

Maturity Enhancement product

European Project Bonds Initiative

Infrastructure Funds (Marguerite fund, Infrastructure/energy fund-of-funds)

Continuation of existing Technical Assistance and Advisory e.g. JASPERS (Joint Assistance to Support Projects in the European Regions), JESSICA (urban), EPEC (PPPs), JEREMIE (SMEs), JASMINE (Microfinance), ELENA (Energy Efficiency)


For more information…

http://www.eib.org/Marc D’hoogeRSFF Programme ManagerResearch, Development & InnovationStructured Finance and AdvisoryPhone: (+352) 4379 87211Fax: (+352) 4379 67292eMail: [email protected]

European Investment Bank100, boulevard Konrad AdenauerL-2950 Luxembourg

Chris KnowlesAssociate DirectorClimate Change and Advisory

Phone: (+352) 4379 87306Fax: (+352) 4379 67292eMail: [email protected]


Nicholas JennettHead of EPECEuropean PPP Expertise CentreDirect Dial: 00 352 4379 87320Direct Fax: 00 352 4379 65499eMail: [email protected]/epec



Annexes


EIB InstrumentsEuropean PPP Expertise Centre

European PPP Expertise Centre a collaborative initiative of the EIB, the Commission and EU Member States.

EPEC’s mission to assist the public sector to address shortcomings in organisational capacity and promote expertise and experience sharing.

Good practice guidance is disseminated among EPEC’s members with the aim of enhancing public sector management, reducing PPP costs and increasing deal flow.

Analysis of the impact of the credit crisis, and the responses of the public sector (guarantee instruments, co-lending facilities, funding competitions and book building) has been the core component of EPEC’s work in 2009.


2020 Marguerite Fund

Target equity base of 1.5b€; associated Debt Co-financing Initiative of 5b€

Focus on Greenfield projects within EU-27 in areas of TEN-T; TEN-E and Climate Change (including renewable energy)

Major public Core Sponsors: EIB; CDC (France); CDP (Italy); ICO (Spain); KfW (Germany) and PKO (Poland)

PPP structure combining long-term private sector, as well as public-sector institutional, investorsAccess to significant deal flow potential in priority sectors throughout EU

Core Sponsors maintain close dialogue with regulatory & public authorities in their home countries and with EU

Focus on solid IRR targets; Fund to give preference to projects with satisfactory Economic Rates of Return (ERR)


EIB energy lending:in 2010, €18.1bn (€ 14.5bn within EU-27), a 50% increase over 2008Up to 2009, EIB financed some 5% of the overall wind installed capacity in Europe as well as leading edge investments in concentrated solar power in SpainProjects contributing to Energy Efficiency amounted to € 2.3bn in 2010 (13% of EIB lending to energy projects)

The RE projects fall into two groups supported by the Bank:mature technologies – already used commercially (onshore wind farm, hydropower, geothermal and biomass)emerging technologies – in an early implementation phase (photovoltaics, solar thermal and second generation biofuel production technologies)in 2010 EIB lent € 6.2bn for RE projects, which is an increase of 35% from 2009 and 33% of EIB’s energy financing.

EIB Contribution to Financing Energy and Climate Change


EIB Contribution to EU Policy - Energy Lending

EIB energy lending:In 2010, €18.1bn (€14.5bn within EU-27), a 50% increase over 2008During the period 2006-2010 €54bn

0%

20%

40%

60%

80%

100%

2005 2006 2007 2008 2009 2010

Renew able Energy Gas/Oil Fields Natural Gas Grids - incl. Storage Regasif ication & Liquefaction Plants

Coal/Lignite Pow er Stations Natural Gas Pow er Stations CHP District Heating

Electricity Grids Nucelar Fuel - Processing Other


EIB 2010 ENERGY LENDING BY OBJECTIVES :18.1 bn EUR

13%

33%

14%

30%

10% ENERGY EFFICIENCY

RENEWABLES

TEN-E

DIVERSIFICATION &SECURITY OF SUPPLY (EU)

DIVERSIFICATION &SECURITY OF SUPPLY(OUTSIDE EU)


2010 EIB ENERGY LENDING BY SECTOR

37%

28%

13%

13%

7%2%

RENEWABLE ENERGY

ELECTRICITY GRIDS

GAS GRIDS

FOSSIL FUEL POWERGENERATIONREFINERIES

OTHERS


EIB Contribution to RE Financing

EIB has increased considerably its lending to renewable energies2006-2010 EUR 15.8bn

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

EUR m

2006 2007 2008 2009 2010

Alternative and renew - mixed sectors Bio fuel manufacturingBiomass Geothermal power stationsHydropower Solar energySolar energy manufacturing Wind energyWind energy manufacturing


EIB has invested EUR 10bn in the deployment of EU renewable energy (close to 30% of total energy lending)A significant part of this investment (22%) has supported

European RE manufacturing industries In addition, EE investments have mounted to EUR 2.2bn in the last two years

* Includes EU 27, potential candidates and candidate countries

765

55

64

27

490

134

784

1385

316

200

996

147

863

109

2270

595

1241

140

3

221

3

130

42

3

125

3

48

5

EIB RE & EE Lending in the EU Region* 2005-2009


EIB lending has supported Innovative concentrated solar power (CSP) plants in Andalucia, Spain: Solucar Solar Thermal Power, Andasol and Solnova

EIB lending has also backed regional RE programmes such as Poitou Charentes photovoltaic regional plan and solar roofs in Germany


8582

300

1285

EIB Lending to EU* Solar Energy 2005-2009


Active in offshore wind since 2002Belwind (BE): first signed EIB PF project2010: C-Power, Baltic I, Borkum WestOffshore wind involves larger project size than onshore windfarmsOffshore wind is still an emerging technologyHigh demand for EIB financingSignificant support to EU manufacturers


300

64

490

127

200

2

34 65

4811030

30

849

EIB Lending to EU* Wind Energy 2005-2010


EIB Financing of Renewable Energy Projects 2005 – 2010 (1)

WINDACCIONA RDIALTO MINHO PARQUES EOLICOSANDALUCIA WIND POWER PROJECTBARROW OFFSHORE WINDPOWERBLPC IV WIND POWERBORKUM WEST OFFSHORE WINDPARKC-POWER II OFFSHORE WIND BELGIUMDIF INFRASTRUCTURE FUND IIDIF RENEWABLE ENERGY FUNDDONG ENERGY POLISH WINDFARMSDONG ENERGY WIND POWERDONG UK RENEWABLESEDA POWER VIEDA POWER VIIEDPR - MARGONIN WINDFARMSEOLICAS DE PORTUGAL INDUSTRIAEOLICAS DE PORTUGAL SFF IESB RENEWABLE PROGRAMMEESPIRITO SANTO INFRASTRUCTURE FUND- IEUFER WIND ENERGYEVELOP BELWIND OFFSHORE WINDFANTANELE WINDFRARMGAMESA WIND POWER RDIGAMESA WIND POWER RDI IIIBERDROLA RENEWABLE ENERGYLONDON ARRAY OFFSHORE WINDFARMORITES WIND FARMOSMANIYE WIND FARMPARQUES EOLICOS GRUPO GENERGSCOTTISH & SOUTHERN RENEWABLES IUK RENEWABLE FINANCING PROGRAM PHASE IUNIFERGIE ENERGIES RENOUVELABLES IIVESTAS RDI WINDPOWER TECHNOLOGY

SOLARABENGOA RDI LOANANDASOL SOLAR THERMAL POWER PROJECTANDASOL SOLAR THERMAL POWER PROJECT IIBANCO GUIPUZCOANO PHOTOVOLTAIC GLCEZ PHOTOVOLTAIC POWER INVESTMENTSENERGY EFFIC & RENEWABLES BARCELONAESPIRITO SANTO INFRASTRUCTURE FUND- IPHOTOVOLTAIC POWER PLANT BRANDENBURGREGION POITOU-CHARENTES PHOTOVOLTAIQUESOLAR ROOFS - ALTERNATIVE ENERGYSOLAR SILICON SUPPLYSOLARWAFER SACHSEN II (SFF)SOLARWAFER THUERINGENSOLNOVA 1 & 3 CONCENTRATED SOLAR POWERSOLUCAR SOLAR THERMAL POWERSUNRAY MONTALTO DI CASTRO PHOTOVOLTAICTHERMOSOLAR GEMASOLAR SPAINUNIFERGIE ENERGIES RENOUVELABLES IIVALENCIA CLIMATE CHANGEZELIOS - PV PLANTS - FRANCE ITALY

GEOTHERMALEDA POWER VIENEL ENERGIA RINNOVABILE & AMBIENTEHELLISHEIDI GEOTHERMAL POWEROLKARIA II EXTENSIONRE GEOTHERMAL ENERGY


EIB Financing of Renewable Energy Projects 2005 – 2010 (2)

HYDROAMENAGEMENT HYDROELECTRIQUE DE FELOUBUJAGALI HYDROELECTRIC PROJECTCHINA CLIMATE CHANGE FRAMEWORK LOANCOMPAGNIA VALDOSTANA ENERGIA & AMBIENTEEDA POWER VIIEDP REPOWERINGELECTRIC POWER RECONSTRUCTION IIENEL ENERGIA RINNOVABILE & AMBIENTEENERJISA HYDROPOWERFIJI POWERGILGEL GIBE II HYDROPOWER PLANTIBERDROLA HYDRO SPAININGA POWER REHABILITATIONJIRAMA ANDEKALEKA HYDROKEMIJOKI HYDROPOWER IINAM THEUN 2 HYDROELECTRIC PROJECTPOWER PLANTS INVESTMENT LOANZESCO KARIBA NORTH II

BIOMASS & BIOFUELSABF BIOFUEL PRODUCTIONACCIONA RDIBIOFUEL PLANT POLANDHVC ALKMAAR BIOMASSKUOPIO ENERGIA CHPPORTUCEL ENERGYUNIFERGIE ENERGIES RENOUVELABLES II

OTHER RENEWABLESBENELUX POWER GENERATION PROJECTCHINA CLIMATE CHANGE FRAMEWORK LOANDEXIA RENEWABLE ENERGYEIB KFW VALUE-ADDED CARBON CREDIT FUNDENERCAP POWER FUNDENERGY EFFICIENCY FRAMEWORK LOANENVIRONMENT & ENERGY FRAMEWORK LOANENVIRONMENT & ENERGY FRAMEWORK LOAN IIEREF EUROPEAN RENEWABLE ENERGY FUND IEXIM BANK OF INDIA FRAMEWORK LOANGREEN ALLIANCE RENEWABLE FUNDINGETEAM GREEN ENERGY TECH RDIINTESA LEASING ENERGIA RINNOVABILELAHTI WASTE-TO-ENERGY PLANTREGIONE LOMBARDIAUBI BANCA ENERGIA RINNOVABILE FLUNIFERGIE ENERGIES RENOUVELABLES


EIB Participation in Funds – Renewables & Carbon

MoroccoCarbon Credits€ 26mEIB/CDC Fds Carbone Maroc

GlobalCarbon Credits€ 100mEIB/KFW II (IFIs+Private)

GlobalCarbon Credits€ 125mPost 2012 (IFIs+Private)

GlobalCarbon Credits€ 100mEIB/KFW (IFIs+Private)

GlobalCarbon Credits€ 50mCFE (IFIs)

NMS & CISCarbon Credits€ 190mMCCF (IFIs+Private)

EU-27Infra/Renewables/EnergyTarget : € 1.5bn2020 Marguerite

ItalyHealth,Transport€ 120mFondo Italia

ES,PT,F,ITRenewables/Infra€ 120mDexia South EU

North EURenewables & Municipalities€ 220mDIF II

CE & L.Am / SE AsiaForestry€ 85mDasos

ES, PTRenewables€ 96mESIF

CE & SEEOnshore Wind€ 98mEnercap

ES, PTWind,Solar,Biofuel€ 41mGreen Alliance

Benelux, F, DE, DK, SEOnshore Wind€ 134mDIF RE

Country FocusSector FocusTotal Commitments

Name

european investment bank financing of european … - ws...8. debt and mezzanine debt product...

Documents