The Investment Plan for Europe European Fund for Strategic Investment (EFSI)

June 2015

1

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

EU Economic context

2

• Six months into a new five year mandate

• New Commission led by President Juncker

• New focus, new structures

EU Political context

3

EU Investment Plan: rationale

EU investment & competitiveness gap

High liquidity in the market

Public budget constraints

Financial and non-financial barriers to investment

EU Investment Plan

EU/MS policy action + EU budget +

EIB capacity to mobilise private

sector funds towards strategic

investments.

4

The challenge of boosting investment

3,039

2,527 2,543

2,528

2,567

2,640 2,717

3,021

2,657

2,714

2,659 2,647

230

370

Gap compared to sustainable trend

2,869

"Sustainable" trend of investment assuming a share in GDP of 21-22%

2,416

2,606

5

EU Investment Plan: estimated impact

6

Boost investment in strategic projects and

access to finance via the European Fund for

Strategic Investment (EFSI) – EIB/EIF

Cooperation with National Promotional Banks

and the EIB

1. MOBILISING FINANCE FOR INVESTMENT

Investment Project Portal

European Investment Advisory Hub:

technical assistance

2. MAKING FINANCE REACH THE REAL ECONOMY

Predictability and quality of regulation

Removing non-financial, regulatory barriers

in key sectors within EU Single Market

Structural reforms at national level

3. IMPROVED INVESTMENT ENVIRONMENT

EU Investment Plan: 3 pillars

7

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

3. Improved investment environment

8

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 (EIAH) – EC/EIB/MS Technical assistance Pooling resources & expertise

2. Making finance reach the real economy

9

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).

10

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.

11

1. European Fund for Strategic Investment (EFSI)

EU guarantee € 16bn

Infrastructure & Innovation window

Long-term investments € 240 bn

SMEs and mid-cap firms € 75 bn

SME window

EFSI € 21 bn

Total over 3 years: € 315 bn

EIB financing EIF financing

€ 5bn

12

Infrastructure and Innovation window

SOURCES OF FUNDING

TYPICAL PRODUCTS OFFERED

FINAL RECIPIENTS AND TYPICAL PROJECTS

Long-term senior debt for higher

risk projects

Equity and quasi-equity

Subordinated loans

Other

investors

join in on

a project

basis

Transport infra

Energy infra Broadband

infra

Energy Resource efficiency

Renewable energy Research

Education

Innovation

SMEs

Long-term investment

funds

The Fund

serves as

credit

protection

for new EIB

activities

European Fund

for Strategic Investments

13

SMEs and mid-cap window

SOURCES OF FUNDING

TYPICAL PRODUCTS OFFERED

Guarantees European Fund

for Strategic Investments

FINAL RECIPIENTS AND PROJECT EXAMPLES

SME e.g.

micro-loans to a SME

Venture Capital

Growth finance

Securitisation

Mid-cap company

e.g. equity in a

start-up

e.g. loans for R&D project

e.g. venture

capital for a

prototype

The Fund

serves as

credit

protection

for new EIF

activities

Other

investors

join in on

a project

basis

14

Key features of EFSI /1

• Focus on investments in real economy

• 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 in EFSI timeframe

15

Key features of EFSI /2

• 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 (eg for SMEs)

• Cross-border

• Investments between a partner in MS and extending to countries in PreAccession and Neighbourhood can be covered by EFSI

16

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

17

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

18

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

19

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

20

• 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

EIB started approvals since Apr-2015

21

• Bioscience R&D (Spain) € 240m • Primary care PPP (Ireland) €140m • Airport expansion (Croatia) € 246m • Finance for SMEs (France, Portugal, UK, Luxembourg,

Italy and Germany) € 1 300m • Industry modernisation (Italy) € 227m • Renewable energy (Denmark) € 2bn • Energy efficiency in buildings (France) € 800m • Gas transmission (Spain) € 326m • Pulp production upgrade (Finland) € 1.2bn

EIB Group started approvals since Apr-2015

22

Status and next steps

Status

• EFSI regulation approved by June.

• 10 projects have already received EIB pre-financing.

• EIAH operational by June.

Next steps

• Project can be submitted to EIB/EIF for EFSI financing.

• EFSI operational by Sep 2015.

• European Investment Project Portal operational by end 2015.

Thank you for your attention – more information available at:

http://ec.europa.eu/priorities/jobs-growth-investment/plan/index_en.htm

#investEU #EFSI