EU Investment Plan for Europe EBRD as a partner in implementation Zsuzsanna Hargitai, Director, EU Funds Co-Financing & Financial Instruments, EBRD Brussels, 8 February 2017
Some distinctive features of EBRD operations Working locally with the private sector and utilities - >110 staff in the EU-12 countries Risk appetite and in-built incentives to ensure additionality to market financing Policy reform dialogue to create more favourable economic & investment conditions Product flexibility, tailored to the clients needs e.g. direct financing for utilities, equity, structured financing Wide range of SME support - e.g. advisory services for women in business, creative industries, investment plan preparation Climate Action & Green Economy focus across investments over 33% of annual investments and targeting 40% by 2020 2
EBRD annual investment - EUR 9.4 billion (2016) Estonia Latvia Lithuania Russia Poland Belarus Czech Republic Ukraine Slovakia Moldova Hungary Slovenia Romania Croatia Serbia Bosnia and Herzegovina Bulgaria Montenegro Kosovo Georgia Albania Armenia FYR Macedonia Turkey Morocco Tunisia Greece Egypt Cyprus Region Investment EU member states 12 COOs 27% Azerbaijan Jordan Uzbekistan Kazakhstan Turkmenistan Tajikistan Ene rgy 27% Infrastructure 19% Kyrgyz Republic Investment by sector I ndustry, Commerce & Agr ibusiness 22% Financial I nstitutions 32% Mongolia 3
EBRD in EU-12 member states EBRD focuses on areas - underserved by commercial financing but such financing could be mobilised with EBRD participation - where EBRD support could lead to change in policy/regulatory framework and corporate behaviour as expected in a sustainable market economy. Examples of focus areas in EU-12: renewable energy, energy/resource efficiency financing, sustainable urban mobility, private sector participation in infrastructure investments, corporate equity, capital market transactions (corporate or covered bonds), securitisation, investments in venture capital/private equity funds, Venture Capital Investment Programme, energy interconnections EBRD borrowers/investees : private corporates, commercial banks, equity funds, municipal and energy utilities - >85% of financing is without sovereign guarantee Working in partnership with the EU and Managing Authorities of the European Structural & Investment Funds examples: smart cities, wastewater utilities, sustainable urban transport, SME energy efficiency, financial instruments for equity EBRD Co-Financing with EIB/EIF under EFSI Slovakia: D4/R7 PPP motorway Greece: Collateralised Loan Obligations Diorama Hellenic Growth Fund Pipeline: infrastructure, energy and telecommunication projects in Romania, Croatia and Greece Television Switch-over (RO) 4
We can make a difference together EFSI 2.0 Investment Platforms Alignment on strategic objectives and policy reform Policy reform Structural Reform Support Services (SRSS) NPL resolution, Capital Market Union, renewable energy/energy & resource efficiency, private sector in infrastructure Energy efficiency financing municipal, SME, corporate Smart Cities Financing & project preparation EU - 12 Direct financing & corporate advisory Equity/mezzanine financing with EIB Advice for Small Business with European Investment Advisory Hub Step up co-operation and impactful operations under the EU Investment Plan for Europe How could EBRD contribute? Project identification & structuring harnessing EBRD local outreach Work with EIB partners on investment structures where EFSI guarantee would support the higher risk tranche Help prepare infrastructure & energy investments EIAH, ESIF funding Crowd in commercial financing through syndication & parallel financing Help improve the business environment, supporting policy reform and institutions implementation capacity - SRSS 5
Annex EBRD General Information An international financial institution, the EBRD is owned by 65 countries, as well as the EU and the European Investment Bank. The shareholding of the EU member states, the EU and EIB represents close to 70%. The EBRD s mandate is to foster the development of sustainable market economies in countries committed to democratic principles. A sustainable market economy is competitive, well-governed, green, inclusive, resilient and integrated. Key operational principles to apply to all investments: Sound Banking, Transition Impact, Additionality (of financing vs markets). Capital base of 30 billion; highest credit rating (AAA/Aaa) from all three main rating agencies (S&P, Moody s and Fitch) Others 11% USA 10% EBRD region excluding EU 7%(2) Shareholding structure Japan 9% EU 28 Countries (1) 63% (1) Includes European Community and European Investment Bank (EIB) each at 3%. Among other EU countries: France, Germany, Italy, and the UK each holds 8.6% (2) Russia at 4% 6
Annex - EBRD how do we work? EBRD has operations in 37 countries in the Central and Eastern European, Central Asian and South- Eastern Mediterranean regions - in-country bankers/experts in our offices in 35 countries (>750 staff). In its operations EBRD integrates - Investments (e.g. loans, mezzanine finance, equity investments, trade financing, credit lines through financial intermediaries) - Policy dialogue (i.e. advocates policy reform, advises on policy reform and assists with implementation) - Client advisory services ( e.g. Advice for Small Business services, Operational Improvement Programmes for utility companies, corporate governance improvement at private or publicly owned companies, energy efficiency audits). EBRD predominantly focuses on the development of the private sector ( >70% of portfolio investments). It applies market based pricing to avoid distortion and is obliged to actively seek to crowd in private sector financing for its investments ( e.g. through syndication, bond issuance). We work towards long-lasting, visible results - we assess expected quantitative and qualitative results ex-ante and monitor/verify them ex-post. 7