ESIF financial instruments

Transcription

1 ESIF financial instruments Robert Pernetta EUROPEAN INVESTMENT BANK Financial Instruments Advisory Division Zagreb, April /04/2017 European Investment Bank Group 1

2 Content Overview of financial instruments Success factors Case: Jessica Lithuania fund of funds Case: D4/R7 Bratislava PPP fi-compass Bi-lateral advisory 2

3 Financial instruments overview Source: European Commission 3

4 Financial instruments - types Financial products: some definitions Loan Guarantee Equity Quasiequity Agreement which obliges the lender to make available to the borrower an agreed sum of money for an agreed period of time and under which the borrower is obliged to repay that amount within the agreed time. Written commitment to assume responsibility for all or part of a third party s debt or obligation if an event occurs which triggers such guarantee, such as a loan default. Provision of capital to a firm, invested directly or indirectly in return for partial ownership of that firm. Equity investor may assume some management control of the firm and may share the firm s profits. A type of financing that ranks between equity and debt, having a higher risk than senior debt and a lower risk than common equity. Quasi-equity investments can be structured as debt, typically unsecured and subordinated and in some cases convertible into equity. 4

5 Key success factors for financial instruments Should be market driven: importance of ex-ante assessment and of market tests Alignment of interests: Manging Authority, (Fund of funds manager), Financial Intermediary, Final Recipient Constructive collaboration Appropriate governance structure Get a «good» fund manager Flexible investment strategy Financial intermediaries as the champions of the instrument Technical assistance to prepare large projects 5

6 Case study: JESSICA Lithuania European Investment Bank Group 6

7 Lithuania JESSICA I & II results achieved Starting from 2009, project loan agreements have been signed for a total of EUR 413m This supported the energy-efficiency works in around 44,000 apartments in circa 1,700 multi-apartment blocks and 16 student dormitories 7

8 JESSICA II leveraged fund Leveraged Fund Lithuania ( ) Ex-ante finished in September Leveraged Fund (managed by EIB) Continues objectives of JESSICA Holding Fund and Jessica II Fund of Funds in the programming period Leveraged Fund established in October 2016 with EUR 100m of ESIF funds Guarantee Agreement(s) Housing and Energy Saving Agency Grant and Technical Assistance Aims to achieve a leverage of 5 times, i.e. generate new modernisation financing of EUR 500m Signature of guarantee agreements following 1 st Selection Procedures in 2017 Expected results: circa 1500 projects (up to 32,500 households) signed for EUR 500m and circa 65,000 annual reduction of CO2 Final Recipient 1 Modernisation Loan Agreements Final Recipient 2 Financial institutions Final Recipient 3 Modernisation Loan Agreements Final Recipient ( ) 8

9 Case study: Bratislava Ring Road D4/R7 European Investment Bank Group 9

10 Bratislava Ring Road D4/R7 Project Description D4 will bypass Bratislava and is part of the TEN-T network Directs transit traffic away from the city and speed up commuting from nearby Key Parameters Length: 59 km Annual availability payment: 53 mil. Construction period: 4 years Concession period: 30 years Financing: PPP EIB support under EFSI FIs from ESIF 10 10

11 Bratislava Ring Road D4/R7 Funding Structure Funder Amount Further Detail Senior Lenders (including EIB) EUR 952 m (including EBL) EIB: EUR 427m (EFSI guaranteed) EBRD: EUR 148m Commercial Banks: EUR 377m Slovak Investment Holding (SIH) (ESIF financial instrument) Equity EUR 27.8 m EUR 87m Mezzanine Loan Initial Equity: EUR 9m Bridged Equity: EUR 78m 11

12 Bratislava Ring Road D4/R7 Key Successes of the D4R7 PPP project The D4R7 PPP project achieved substantially lower costs (c. 60 % lower than original estimates), related achievements include: Technical optimisation of the project IFI support (finance and advisory) was essential Participation of SIH using ESIF proving the case for Financial Instruments Proving that Financial Instruments are a viable alternative to grants in project finance Robust Competitive Dialogue & strong market appetite (both Financiers and Contractors) Environmental compensation agreed for construction through a Natura 2000 site Off Balance sheet treatment is achievable 12

13 Learn more fi-compass platform 13

14 Bilateral Advisory Supports public authorities and other stakeholders throughout the entire financial instruments life cycle in setting up and implementing tailor made financial instruments/investment platforms Carries out ex-ante assessments Develops a suitable investment strategy and governance structure and provides the necessary support to get funds successfully up and running Provides support to public bodies in relation to financial intermediaries selection and due diligence and in the consideration of State aid issues European Investment Bank Group 14

15 Financial Instruments Advisory Division