EIB group experience in managing financial instruments and banks role Vilnius, 17 th May 2016 CITYnvest Lithuania 1
European Investment Bank Group 2
European Investment Bank Group 3
Poland - JESSICA financing structure and types of projects JESSICA Holding Fund EU funds Regional Operational Programme 2007-2013 Holding Fund Pomerania, Wielkopolska, Mazovia, Silesia Operational Agreements UDFs (BGK, BOŚ) Managing Authority s contribution Allocation to the UDF Urban Project 1 UDF Managers First HF established in 2009 now 4 Holding Funds (1 closed) and 5 UDFs (7 UDFs) with (as of 31 December 2015) 159 Investment Agreements with Final Beneficiaries amounting to over PLN 1,17bn Focus on: Revitalisation of urban areas, post-military and post-industrial areas; investments in support of business environment institutions (Wielkopolska) Revitalisation of urban areas, post-military and post-industrial areas; multifunctional approach to degraded areas (Silesia) Development and integration of effective and sustainable public transport, energy infrastructure (renewable energy and energy efficiency); improvement of cities competitiveness (Pomerania) Revitalisation of urban, post-military and post-industrial areas; creation and development of clusters of regional character; development of energy infrastructure (Mazovia) JESSICA loans Urban Project 2 Investment Agreements Urban Project 3 (...) Co-financing
Millions Lithuania - financing structure and types of projects (1/2) Holding Fund Lithuania (2007-2013) Established in 2009 with EUR 173m EU structural and national funds and 4 Financial Intermediaries. Focus on energy efficiency for multi-apartment buildings and student dormitories. Success in attracting private finance via securitisation of future reflows from JESSICA Holding Fund portfolio EUR 80m provided. About 690 buildings have been finished and circa 370 undergoing works. Achieved energy savings of 67% on average. Success story and lessons learned Flexibility Effective governmental public relations campaign Sound cooperation By 2014 all EU and national funds had been committed to projects role model throughout Europe Demand outstripped by far the available public funds The product worked and could attract private co-financing and risk sharing 140 120 100 80 60 40 20 - Bridge Financing Modernisation Loan 128.42 AB Šiaulių bankas JESSICA Holding Fund (managed by EIB) Urban Development Funds Contingent Loans Repayments Final Beneficiaries Individual owners of apartments Administrators Higher education institutions Investment Committee Signatures with Final Beneficiaries per source of financing [m EUR] (as of May 2016) 82.99 "Swedbank", AB 29.83 Multi-apartment buildings 4.62 Housing and Energy Saving Agency Grant and Technical Assistance 11.74 PIDA/CPMA AB SEB bank PIDA/CPMA EU funds Pre-financing Reflows Dormitories
Lithuania - financing structure and types of projects (2/2) Fund of Funds Lithuania (2014-2020) Ex-ante finished in December 2014. EUR 1 billion financing gap estimated by the ex-ante report as needed for renovation of min 3000 multi-apartment buildings. Continues objectives of JESSICA Holding Fund in the new 2014-2020 programming period. FoF established in May 2015 with EUR 150m of ESIF funds EIB s first mandate for DFIs. Leveraged Fund Jessica II (managed by EIB) Operational Agreement(s) Housing and Energy Saving Agency Grant and Technical Assistance In August 2015 EIB and Šiaulių bankas signed the first Operational Agreement under 2014-2020 of EUR 68m under 1st Selection Procedure In April 2016 EIB and Šiaulių bankas signed EUR 30m pre-financing agreement Reflows Modernisation Loan Agreements Financial Intermediaries Reflows Modernisation Loan Agreements 357 projects signed for EUR 90m and circa EUR 60m disbursed Final Recipient 1 Final Recipient 2 Final Recipient 3 Final Recipient ( ) Results of 2nd Selection Procedure for EUR 80m pending
Why use financial instruments? A more efficient use of (scarce) public sector resources, especially for revenue generating or cost saving projects Greater leverage potential Brings financial discipline into the project/initiative: transparency/identification/selection process Can be combined with technical support and/or grants to overcome market barriers Reutilisation of resources: revolving nature of the instruments European Investment Bank Group 7
Key success factors Should be market driven: importance of ex ante assessment and of market tests Keep It Simple and Smart (KISS): right balance between policy objectives and real market absorption capacity Alignment of interests: Managing Authority, FoF, Financial Intermediary, Final Recipient Constructive collaboration vs not my problem attitude Appropriate governance structure Get a «good» fund manager Flexible investment strategy Financial intermediaries as the champions Technical assistance to prepare projects (e.g. ELENA) European Investment Bank Group 8
Baltic Sea and Northern Europe Department Goetz von Thadden Head of Unit, Financial Instruments T: +352 4379 87613 E: g.vonthadden@eib.org Junona Bumelytė Fund Officer, Lithuania T: +352 4379 888203, E: j.bumelyte@eib.org Agata Matusiak Fund Officer, Poland T: +352 4379 85804, E: a.matusiak@eib.org European Investment Bank Group 9