THE INVESTMENT PLAN FOR EUROPE EUROPEAN FUND FOR STRATEGIC - PowerPoint PPT Presentation

THE INVESTMENT PLAN FOR EUROPE EUROPEAN FUND FOR STRATEGIC INVESTMENTS (EFSI) EUROPEAN INVESTMENT ADVISORY HUB (EIAH) EUROPEAN INVESTMENT PROJECT PORTAL (EIPP) IMPROVED INVESTMENT ENVIRONMENT

Agenda  European economic context  Investment trends  The Investment Plan for Europe: key features and status  Pillar 1. Mobilising finance for investment  Pillar 2. Making finance reach the real economy  Pillar 3. Improved Investment environment 2

EU economic context  The European economy is in its fourth year of recovery . Economic growth is expected to remain modest as key trading partners' performance has slowed and some of the so far supportive factors start to wane.  Very accommodative monetary policy has set the scene for a pick-up in investment by making access to funding easier and cheaper. Fiscal policy in the euro area is expected to be supportive of growth this year.  Although oil prices fell again in early 2016, this support should gradually fade as the oil price rebounds. Although euro area exports are still benefiting from the euro‟s past depreciation, the currency‟s recent rise could make the euro area more susceptible to the effects of slower external growth .  The moderate pace of improvement in labour markets is expected to continue. EU unemployment is expected to fall from 9.4% in 2015 to 8.9% in 2016 and 8.5% in 2017.  The economies of all Member States are expected to expand next year, but growth is still expected to remain uneven across the EU.  Euro area GDP growth : 1.7% in 2015; expected 1.6% in 2016 and 1.8% in 2017  EU28 GDP growth expected to moderate from 2.0% last year to 1.8% in 2016 before reaching 1.9% in 2017. 3 Source: European Commission, Spring Economic Forecast, May 2016

EU economic growth EU GDP growth 2012 EU GDP growth 2016 (forecast) Source: European Commission, Spring Economic Forecast, May 2016 4

EU economic policies Sustaining and strengthening the economic recovery: • 1. boost investment • 2. pursue responsible public finances • 3. structural reforms to enhance competitiveness. 5

EU investment (private/public) trend 6

Investment gap: EIB analysis • Productivity growth in EU < US since mid-1990s • Additional investment estimated by EIB: + € 130bn/y in R&D to meet EU target of 3% of GDP + € 100bn/y to upgrade Energy networks + € 80bn/y to upgrade Transport networks + € 65bn/y to reach EU Digital Agenda standards + € 10 bn/y for state-of-the-art Education facilities + € 90 bn/y to rehabilitate Environmental services and Water + € 35bn/y in VC financing to match US levels of VC/GDP • Most of these needs have to be translated into concrete investment projects:  Structural reforms, Policies to address market inefficiencies, Advisory, Risk- taking. Source: EIB, "Restoring EU competitiveness", Jan-2016 7

Why an Investment Plan for Europe? Investment & competitiveness gap Investment Plan for Europe High liquidity in the market • EU and Member State policy action • EU budget guarantee Public budget constraints • EIB capacity to mobilise additional investment Financial and non-financial barriers to investment 8

The 3 pillars of the Investment Plan for Europe 1. MOBILISING FINANCE 2. MAKING FINANCE REACH THE REAL ECONOMY FOR INVESTMENT  Mobilise at least € 315bn over 3 years for strategic  European Investment Project Portal (EIPP) investments and access to finance via the European  European Investment Advisory Hub (EIAH) Fund for Strategic Investments (EFSI) within EIB/EIF  Cooperation with National Promotional Banks 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 9

1. European Fund for Strategic Investments (EFSI) EIB EFSI risk-bearing capacity EU Budget Own resources € 21 bn Guarantee x3 Other financiers EIB / EIF financing  € 61 bn (private sector, NPBs,...) x5 SME Infrastructure window & Innovation window Investments value over 3 years (mid 2015-mid 2018)  € 315 bn 10

EFSI value added: making a difference Addressing Financing Absorbing part of market failures or operations not the risk to trigger sub-optimal possible to same additional investment extent otherwise investments situations Impact orientation Attracting other Enhancing Supporting sources of employment growth finance 11

European Fund for Strategic Investments 12

Examples of EFSI operations Financing for a French SME guarantee pioneering programme agreement EUR 400m to Unlocking EUR trigger energy 100m of loans for efficiency investments 1 000 SMEs in in private homes Bulgaria Driving clean For energy Backing Supporting energy efficient midcap smaller investment buildings modernisation businesses Equity-type financing Funding cutting-edge for an innovative fund steel production facilities in Italy EUR 75m for EUR 100m for investment in offshore wind, biomass and innovative and transmission projects competitive steel products in Denmark 13

Example of EFSI operation financed by EIB Driving clean energy investment EIB participation in an innovative fund is mobilising some Equity-type financing EUR 2bn of investment for an innovative fund in offshore wind, EUR 75m for biomass and investment in offshore wind, biomass and transmission projects in transmission projects Denmark 14

Example of EFSI operation financed by EIF Supporting smaller businesses An EIF guarantee agreement is helping Equity-type financing to unlock EUR 100m for an innovative fund of loans for some EUR 75m for 1 000 SMEs in investment in offshore wind, biomass and Bulgaria transmission projects 15

EFSI type of instruments Continuously adapting to market needs 16

EFSI setup and governance EIB EFSI Group All EFSI operations are financed by the EIB Group (EIB&EIF) • On the EIB Group‟s balance sheet (no separate entity) • Subject to standard due diligence • EIB & EIF governing bodies approve each operation EFSI governance: • Steering Board • Investment Committee, headed by a Managing Director Operations already started in spring 2015 17

EFSI key areas Operations to be consistent with EU policies and to support any of the general objectives: 1. Research, development and innovation 2. Energy (ref. Energy Union priorities) 3. Transport 4. Information and Communication Technologies 5. Environment and resource efficiency 6. Human capital, culture and health 7. Support to SMEs and mid-cap companies, through local partner banks and institutions 18

Key features of EFSI  Focus on investments in real economy  Results on growth and jobs  Market-driven, no political interference  No geographic or sector pre-allocation  Leverage / crowd-in private sector and third parties  Economic and technical viability  Additionality  Market failures and sub-optimal investment  Higher risk-taking than EIB normal activity in EFSI timeframe  Pricing in line with EIB policies 19

Key features of EFSI Size of investments  EIB uses min € 25m for individual loans  Smaller schemes can be grouped into framework loans  No size restriction for operations via Fin. Intermediaries (e.g. for SMEs) Geographic scope  EU28  Projects involving an entity in a MS and extending to Enlargement (Western Balkans, Turkey), EU East/South Neighbourhood, EEA/EFTA (Norway, Switzerland, Liechtenstein), Overseas Countries and Territories. 20

Who can benefit? Eligible counterparts SMEs Utilities and Corporates of all (up to 250 public sector sizes employees) or entities midcaps (non-sovereign) (up to 3 000) Contact EIB Group directly National via InfoDesk or Dedicated Promotional relevant Investment Banks or other Operations Platforms banks for Department intermediation www.eib.org www.eif.org 21

EFSI Infrastructure & Innovation financing: step-by-step 22

EFSI SME financing 23

EFSI investment platforms  Pooling of projects with thematic or geographic focus  Flexible form: co-financing agreement, SPV, Fund, etc.  Useful to pool small projects  Can benefit from the EU Guarantee via the EIB  Cooperation with EU National Promotional Banks (NPBs)  Rules on operations with NPBs and Investment Platforms approved Guidance brochure by the Commission and the EIB available at http://ec.europa.eu/economy_finance/financial_operations/documents /efsi_rules_applicable_to_operations_en.pdf Interest by institutional investors, third countries and Sovereign Wealth Funds 24

EFSI in combination with EU funds  MS may use EU funds to co-finance EFSI projects.  ESIF (European Structural and Investment Funds) programmes may contribute to the achievement of the objectives of the Investment Plan and be complementary to EFSI support, so as to ensure higher value-added and leverage:  at Project level  at Investment Platform level  Guidance Brochure by the Commission available at ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/efsi_esif_ compl_en.pdf 25

EFSI scoreboard 26