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 EU/MS policy action + EU budget + High liquidity in the market EIB capacity to mobilise private sector funds towards strategic Public budget constraints investments. Financial and non-financial barriers to investment 3
The challenge of boosting investment "Sustainable" trend of Gap compared investment assuming a 3,039 3,021 to sustainable trend share in GDP of 21-22% 2,869 370 2,714 230 2,640 2,717 2,657 2,659 2,647 2,543 2,606 2,527 2,567 2,528 2,416 4
EU Investment Plan: estimated impact 5
EU Investment Plan: 3 pillars 2. MAKING FINANCE REACH THE REAL 1. MOBILISING FINANCE FOR INVESTMENT ECONOMY Boost to strategic investment and access to Investment Project Portal finance for SMEs and mid-cap companies via European Investment Advisory Hub: the European Fund for Strategic Investment technical assistance (EFSI) – EIB/EIF Cooperation with National Promotional Banks and the EIB 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 public- private 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 & SME window Innovation window EIB financing EIF financing Long-term investments SMEs and mid-cap firms € 240 bn € 75 bn Total over 3 years: € 315 bn 11
Infrastructure and Innovation window TYPICAL PRODUCTS FINAL RECIPIENTS AND SOURCES OFFERED TYPICAL PROJECTS OF FUNDING Long-term The Fund Other Long-term senior investment serves as investors debt for higher funds Transport credit join in on risk projects infra protection a project Energy for new EIB basis infra Broadband activities infra European Fund Energy Subordinated loans for Strategic Resource Investments Innovation efficiency Renewable energy Research Equity and quasi-equity Education SMEs 12
SMEs and mid-cap window SOURCES TYPICAL PRODUCTS FINAL RECIPIENTS AND OFFERED PROJECT EXAMPLES OF FUNDING The Fund Other e.g. equity in a serves as investors Venture Capital start-up credit join in on protection a project SME e.g. for new EIF basis micro- activities loans to Guarantees a SME European Fund for Strategic Investments e.g. loans for R&D Securitisation project Mid-cap company e.g. venture capital for Growth finance 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-growth- investment/plan/index_en.htm #investEU #EFSI
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