The Investment Plan for Europe European Fund for Strategic Investment (EFSI) June 2015
EU Economic context EU growth benefitting from economic tailwinds Low oil, low Euro, QE, broadly neutral fiscal stance Boost for an otherwise mild cyclical upswing GDP expected +1.8% in 2015; +2.1% in 2016 Labour markets are slowly improving but unemployment remains high in certain countries Inflation expected to recover later this year Medium-term outlook still affected by structural and crisis-related weaknesses 1
EU Political context Six months into a new five year mandate New Commission led by President Juncker New focus, new structures 2
EU Investment Plan: rationale EU investment & competitiveness gap EU Investment Plan High liquidity in the market Public budget constraints EU/MS policy action + EU budget + EIB capacity to mobilise private sector funds towards strategic investments. Financial and non-financial barriers to investment 3
The challenge of boosting investment "Sustainable" trend of investment assuming a share in GDP of 21-22% 3,039 3,021 Gap compared to sustainable trend 2,869 2,527 2,640 2,543 2,567 2,528 2,717 2,657 2,714 2,659 2,647 2,606 230 370 2,416 4
EU Investment Plan: estimated impact 5
EU Investment Plan: 3 pillars 1. MOBILISING FINANCE FOR INVESTMENT 2. MAKING FINANCE REACH THE REAL ECONOMY Boost to strategic investment and access to finance for SMEs and mid-cap companies via the European Fund for Strategic Investment (EFSI) EIB/EIF Cooperation with National Promotional Banks and the EIB Investment Project Portal European Investment Advisory Hub: technical assistance 3. IMPROVED INVESTMENT ENVIRONMENT Predictability and quality of regulation Removing non-financial, regulatory barriers in key sectors within EU Single Market Structural reforms at national level 6
3. Improved investment environment Better and more predictable regulation at all levels Capital Markets Union Making most of the Single Market Energy Union Digital Single Market Services Market Better implementation and enforcement Structural reforms in the Member States Openness to international trade and investment 7
2. Making finance reach the real economy Building a dynamic pipeline of viable projects European Investment Project Portal Matching investment opportunities proposed by project sponsors with investors' interest Strengthening advisory services European Investment Advisory Hub Technical assistance Pooling resources & expertise 8
2a. European Investment Project Portal Bridge between EU's investment opportunities and potential investors. A web portal enables EU-based project promoters (public authorities, private, PPP) to share their investment proposals seeking external financing, in a transparent way. Investors can search for opportunities across Europe (size, sector, geography). Effective form of presenting new project ideas to the market (G20/ OECD experience). 9
2b. European Investment Advisory Hub A single access point to a wide range of advisory services. Strengthened advisory support throughout the project cycle: project identification, preparation and implementation incl. the use of financial instruments, advice on structuring and implementing publicprivate partnerships and facilitation of access to finance. A cooperation platform a peer-to-peer exchange and sharing of know-how regarding advisory services. The Hub: a gateway to Targeted advisory support for project development. Technical capacity building. Expert guidance from experienced financial & technical professionals. Information and knowledge sharing The Hub seeks to improve project quality and be the reference point for project advisory support in Europe. 10
1. European Fund for Strategic Investment (EFSI) EU guarantee 16bn 5bn EFSI 21 bn Infrastructure & Innovation window SME window EIB financing EIF financing Long-term investments 240 bn SMEs and mid-cap firms 75 bn Total over 3 years: 315 bn 11
Infrastructure and Innovation window SOURCES OF FUNDING TYPICAL PRODUCTS OFFERED FINAL RECIPIENTS AND TYPICAL PROJECTS The Fund serves as credit protection for new EIB activities Long-term senior debt for higher risk projects Other investors join in on a project basis Transport infra Broadband infra Long-term investment funds Energy infra European Fund for Strategic Investments Subordinated loans Innovation Energy Resource efficiency Research Renewable energy Equity and quasi-equity SMEs Education 12
SMEs and mid-cap window SOURCES OF FUNDING TYPICAL PRODUCTS OFFERED FINAL RECIPIENTS AND PROJECT EXAMPLES European Fund for Strategic Investments The Fund serves as credit protection for new EIF activities Venture Capital Guarantees Securitisation Other investors join in on a project basis SME e.g. equity in a start-up e.g. microloans to a SME e.g. loans for R&D project Growth finance Mid-cap company e.g. venture capital for a prototype 13
Key features of EFSI /1 Focus on investments in real economy Measurable results on growth and jobs Market-driven, no political interference No geographic or sector pre-allocation Support to EU policies Leverage / crowd-in private sector and third parties Economic and technical viability Additionality vs existing instruments Higher risk-taking than EIB normal activity 14
Key features of EFSI /2 Size of investments EIB uses min 25m for individual loans Smaller schemes can be grouped into framework loans No restriction for operations via fin. Intermediaries (eg for SMEs) Cross-border Investments between a partner in MS and extending to countries in PreAccession and Neighbourhood can be covered by EFSI 15
Opportunities for promoters/investors Projects Cofinancing / Risk-sharing with EIB/EIF Investment Platforms Pooling of projects with thematic or geographic focus Agreement or Fund Can benefit from EU Guarantee via EIB Cooperation with EU National Promotional Banks 16
EFSI project cycle Project promoters present proposal to EIB/EIF directly EIB/EIF due diligence EFSI Investment Committee approval of EU guarantee EIB/EIF Board approval Signature Financing Implementation and monitoring 17
EFSI Governance EFSI Investment Committee (8 independent experts) Decisions on use of EU guarantee for each operation based on Investment guidelines EFSI Steering Board (EC/EIB) Strategic orientation Policy setting EFSI Managing Director Daily management 18
EIB started approvals since Apr-2015 Bioscience R&D (Spain) 240m Primary care PPP (Ireland) 140m Airport expansion (Croatia) 246m Industry modernisation (Italy) 227m Renewable energy (Denmark) 2bn Energy efficiency in buildings (France) 800m Gas transmission (Spain) 326m Pulp production upgrade (Finland) 1.2bn 19
Status and next steps Status Political agreement by EU Institutions reached end May, to be formalised by June. Eight projects have already received EIB pre-financing. Next steps Project can be submitted to EIB for EFSI financing EFSI and Advisory Hub operational Sep-Oct 2015 Investment Project Portal operational by end 2015 20
Thank you for your attention more information available at: http://ec.europa.eu/priorities/jobs-growthinvestment/plan/index_en.htm #investeu #EFSI