The extension of the duration of the European Fund for Strategic Investment (EFSI 2.0)

Transcription

1 The extension of the duration of the European Fund for Strategic Investment (EFSI 2.0) European Economic and Social Committee Public Hearing Matthieu Bertrand EFSI Senior Mandate Manager, EIB, Directions of Operations 10 November 2016

2 Functioning of EFSI 2

3 EFSI Investment Mobilised geo balance 3

4 EFSI Investment Mobilised sectoral repartition 4

5 EFSI implementation other facts Development of new products, in particular for risk-sharing, equity strategy Strong cooperation with NPBs/NPIs Around 3 in 4 clients benefitting from EFSI IIW are new counterparts to the EIB. Private financing: 62% of EFSI co-financing coming from private sector All operations fall under the EIB Special Activity category at the time of signature 5

6 Continuity Market driven instrument Predictability of financing Respect for commercial sensitivity Stable governance New opportunities Less Developed & Transition Regions Agriculture, Fishery and Aquaculture Local currency financing ESIF / Other EU instruments 6

7 Market driven instrument - EFSI responds to the market s demand for financing across eligible sectors and geographies. It supports bankable projects to overcome market failures in the access to finance and sub-optimal investment situations. EFSI is directly managed by the EC in the form of guarantee. The EC Proposal maintains these key tenants of EFSI. Predictability of financing - Promoters expect that the time and resources dedicated to negotiating a potential EFSI operation with the EIB Group will yield consistent and predictable results. The EC Proposal maintains the essential bond between Additionality and Special Activities, whilst listing the typical credit / structuring features that characterise them. - EIB welcomes proposed automatic additionality of cross-border projects 7

8 Special Activities Risk qualification approved by the EIB Board denoting operations where EIB is exposed to higher levels of risk than under its standard activities. The EIB s willingness to accept higher levels of risk is assessed on a case-by-case on the individual needs / merits of the operation. The EC Proposal illustrates features that would typically lead to a classification of an operation as Special Activities: subordination, exposure to specific risks, such as unproven technology, high risk counterparts etc Special Activities are used by EIB to fill gaps in the financing, either directly or as a means to crowd-in other financiers. 8

9 Specific eligibility for less-developed and transition regions - Complement other EFSI objectives, both through the support of new projects and the wider eligibility of investments. E.g. modernisation of industrial plant. - Contribute to greater geographical balance, competitiveness and employment. - Eligibility requirements still apply: consistency with EU policies, additionality, economical & technical viability, crowd-in private investors. Agriculture, Fisheries, Aquaculture - Complement other EFSI objectives, both through the support of new projects and the wider eligibility of investments. E.g. modernisation of food processing plants. - Important signaling effect for project promoters, NPBs or specialised investment funds. - Expected to increase EFSI outreach in rural and costal regions of the EU. - Could include also forestry and the wider bioeconomy 9

10 Respect for commercial sensitivity - Promoters have a legitimate expectation that EIB shall not disclose publicly information that they consider to be commercially sensitive. This a basic premise of the lender-borrower / investor-investee relation that cannot be betrayed. The EC proposal provides adequate protections in this regards, which must not be downgraded. Stable governance - The EFSI governance structure needs to remain stable for the full period. It has established important guidelines for the implementation of EFSI, overseen the rolling out of new products and accommodated an strong increase in the EFSI operations. 10

11 40% of EFSI financing under IIW in projects that contribute to Climate Action, in line with COP21 Avoid motorways unless needed to attract private finance in cohesion countries or cross-border Adherence to non-codified and legally uncertain requirements when dealing with non-cooperative jurisdictions Significant increase in the objectives of the EIAH and provision of pro-active support to the establishment of IPs 11

12 40% of EFSI financing under IIW in projects that contribute to Climate Action, in line with COP21 - The EIB is one of the largest providers of climate finance worldwide, with an objective to commit at least 25% of its lending portfolio to low-carbon and climate-resilient growth, on the basis of a stringent methodology. - The proposed target is difficult to achieve across all sectors and is very volatile, depending on market conditions and projects being presented to the EIB. - Support to SMEs and Mid-caps has a limited Climate Action component. - Such a target should recongnise the demand driven nature of EFSI, present it as a best-effort climate action target for EIB, and exclude the support to SMEs and Midcap companies in the calculation of the target 12

13 Avoid motorways unless needed to attract private finance in cohesion countries or cross-border - EU-wide investment needs over the next four years, especially for upgrades / structural stability, is very significant. - EIB support to motorways focuses on the TEN-T and on projects having higher Economic Rates of Return than other transport projects. - EFSI support to motorways has focused on PPP, with substantial transfer of risks to the private sector and medium / high risk financing (senior debt with low investment grade risk, with long tenors and high individual exposures; subordinated debt or equity-type). - Level of risk of PPP financings is comparable between Cohesion and non- Cohesion MS. - Motorways have already been excluded from most EU grant schemes. 13

14 Adherence to non-codified and legally uncertain requirements when dealing with non-cooperative jurisdictions - In line with EC publication of 15/9 on pre-assessment ('scoreboard of indicators') of all third countries, any exclusion or limitation in financing needs to be based on (i) EU Member States decision on which countries to screen; (ii) objective and published clear criteria; (iii) dialogue with countries concerned; and (iv) EU Council decision on which countries to list and which counter-measures to take. The EIB agrees with this process and is fully aligned and any such list will directly apply to EIB. - Any limitation in financing to countries not officially listed by EU or Global Forum would differ from the above, constitute a counter-measure preempting the EU Council decision and contradict fundamental EU law principles such as legal certainty. 14

15 Significant increase in the objectives of the EIAH and provision of pro-active support to the establishment of IPs - EIAH will do its utmost to facilitate more investment in EU as a needsdriven instrument. Proposed increase in objectives risks dispersing focus & creating unrealistic expectations given current resources. - For increased local advisory support, EIAH works also through partners on the ground and will selectively consider bespoke presence of Hub resources where needs are greatest. EIB welcomes additional reference to potential partnerships with entities such as EBRD and World Bank. - Hub is designed and equipped to provide advice on establishment of investment platforms, but no other form of support. 15

16 The EIB Board welcomed the EC proposal to expand EFSI and expects to reach a concrete decision on its additional contribution to the guarantee after considering the Independent Evaluation. EFSI has proven to work and EIB is committed to improve it further, while ensuring continuity in its main features. 16

17 Thank you! 17