repin and geeref - renewable energy platform for institutional investors and global renewable energy...
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REPIN and GEEREF -
Renewable Energy Platform for Institutional Investors and Global Renewable Energy and Energy Efficiency Fund
Leveraging Private Sector Investment in Climate Finance
22 October 2014
Mobilising Institutional Investment in AfricaStockholm, 22.10.2014
EIB and Climate Action
EIB is the EU’s long-term lending bank set up in 1958 by the Treaty of Rome, headquartered in Luxembourg
EIB shareholders are the 28 EU Member States
Largest multilateral lender and borrower in the world
Lending in 2013: EUR 71.7bln
~400 projects annually in more than 160 countries
More than 25% of total EIB lending goes towards Climate Action
In 2013 EUR 19bn (signed loans) in Climate Action
Almost EUR 100bn of financing worldwide during 2008 – 2013
More than 50 in-house environmental specialists
2European Investment Bank
REPIN: Main objective
3European Investment Bank
Create more RE deal flow
Focus is on refinancing of commercial bank debt
Main objective
Free commercial lending capacity for further RE investments2
Enable institutional investors with varying risk/reward profiles to acquire mature long-term RE assets3
Lower cost of capital to improve RE project bankability: provide commercial lenders with ‘guaranteed exit’ and remove refinancing risk premium from equity
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Key elements
Ultimate goal: simultaneously stimulate deal flow and engage institutional investors to increase overall RE financing
REPIN: Concept
4European Investment Bank
Banks
Renewable Energy Platform for Institutional Investors (REPIN)
Equity provider
Other sponsors
RE debt provider
Institutional Investors
for example:for example: for example:
Pension funds
Insurers & re-insurer
Other asset
managers
Straight pass-through of loans from a project or portfolio
Issuance of notes from a loan portfolio
Securitisation of loan portfolio(s)
Sell loans/cash flows from operational projects to free-up capital
Projects need to meet minimum standard
Sets minimum standards (technical, legal)Aggregates & brokers RE loan portfoliosOffers transaction vehicles that meet institutional
investors’ different risk/reward expectations→ All vehicles could be structures with or without
credit enhancementMonitors & manages loan portfolios (potentially with
assistance of initial debt provider)
Enter into purchase transactions meeting different risk/reward expectation
REPIN: Potential roles of EIB and co-sponsors
5European Investment Bank
Straight pass-through of loans from a project or
portfolioBanks
Renewable Energy Platform for Institutional Investors (REPIN)
Equity provider
Other sponsors
RE debt provider
Institutional Investors
for example:for example: for example:
Pension funds
Insurers & Re-
insurer
Other asset
manager
Issuance of notes from a portfolio
Securitisation of loan portfolio(s)
Sets eligibility requirements for operational projects
Helps sourcing projects/portfolios
Develops eligibility requirements with investors
Provides quality assurance
Service provider(s)
Financial intermediary
Due diligence Project
risk/rating Project /loan
monitoring Underwriting of REPIN
(if required)
Structuring/Arranging Credit enhancement
Credit enhancement(if required)
Insurer/ Re-insurer
Insurance Warranty protection
GEEREF: Strategy overview
6European Investment Bank
Strategy •Fund of Funds: investing in Fund vehicles
Sectors•Renewable energy (hydro, solar, wind, biomass and geothermal)•Energy efficiency (waste heat, energy management, cogeneration)
Geographies •Developing countries and emerging markets
Stage of projects •Mainly greenfield with total CapEx of ~ EUR 30-40m
Target fund size •EUR 50 to 150m, GEEREF commitment: EUR 10m to 20m
Public investors •EUR 112m from EC, D and NOR plus;
Private investors•Receive priorities on reflows and preferred hurdle•Family offices, Pension funds, HNWI, targeting further EUR 112m
Status •Operational, 7 fund commitments signed, completing fundraising
Current GEEREF portfolio
As at Q1-2014
Fund Regions First close Sector # of projects/companies
Evolution Southern Africa Jul-08 RE 12 (wind, hydro)
REAFIndia, Philippines
Dec-09 RE 9 (wind, solar, hydro)
Frontier East Africa Aug-11 RE 5 (hydro)
EELAF II Latin America Jan-12 RE/EE 1 (EE)
Armstrong SE Asia Aug-12 RE 2 (Solar PV)
MSEF Central America May-13 EE 0
Visum Eastern Europe tbd RE 0
Total 29
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Regions covered
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GEEREF follows a triple bottom line focussing on:
Climate change impact – Planet
•CO2 emission avoidance•Bringing more RE generation capacity on stream•Enhancing EE
Social impact – People
• Increasing access to energy and electricity• Creating sustainable employment
Financial sustainability – Profit
• Generating market- and risk-adequate returns• First exits and reflows for investors already achieved• Promising portfolio of underlying RE projects built and
first generating revenues
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Thank you for your attention!
10European Investment Bank
Christopher KnowlesHead
Climate Change & EnvironmentOperations Directorate
European Investment Bank100, boulevard Konrad Adenauer
L-2950 Luxembourg
Gunter FischerSenior Investment
Manager –GEEREFOperations Directorate
For more information please contact:
Annex
22 October 2014
Rationale for REPIN
12European Investment Bank
REPIN bridges between short-term lenders and long-term institutional investors
REPIN
Need to overcome “chicken and egg” dilemma: developers lack investment signals while institutional investors lack suitable products for RE investments
Guaranteed access to refinancing should stimulate more deal flow
Institutional investors have interest in long-term, stable and index-linked cash flows from operational RE projects
Regulatory changes (Basel III & Solvency II) should lead to shorter debt tenors and earlier RE refinancing requirements
Aggregation of projects and standardisation can streamline approval process and reduce transaction cost
Technical support required to structure suitable investments and reduce knowledge gaps
Next steps
13European Investment Bank
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Validate concept with market professionals (on-going)
Identify a group of institutional investors that have an interest to continue the dialogue
Identify (a) sample portfolio(s) to develop potential structures (real/dummy)
Structure first pilot transactions to prove concept
GEEREF has a specific focus on Africa:
Fund commitments:
• First focused sustainability fund in Africa signed
• Next investment currently in closing
• Currently Northern Africa/MENA fund under consideration
• Plan for commitment to at least one other fund in Africa
Fund commitments:
• More than half of current underlying portfolio projects in Africa
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Portfolio construction and pipeline
Asia REAF Armstrong India PVFollow-on
IFund XIV
Africa Evolution Frontier SSA REFollow-on
II
Latin America EELAF II MSEF
Eastern Europe Visum CEE RE
MENA MENA RE
GEEREF intends to build a diversified portfolio of 14 Fund commitments
Commitment Approved Earmarked Pipeline
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GEEREF leverages substantial amounts
GEEREFRegional
FundsTotal equity and debt invested into Regional Funds’
projects
X X
€200m €1,400m €9,500m
Key
A Shares
B Units
Equity
Debt
€10m
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GEEREF is actively fundraising and structures new compartment
Fundraising:
• GEEREF team is actively fundraising
• First close December 2013 with private investors
• Fundraising open until Q3/2014
New compartment envisaged:
• Interesting dealflow outside of classical GEEREF focus
• Mostly: offgrid RE access to energy: solar lanterns, SHS
• Interesting complement to GEEREF
• Higher return and risk than classical GEEREF
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Key investment themes
Renewable energy demand growth
• 1,600 GW additional capacity to 2035• $3,144bn investment needed
Energy efficiency gains • National policies to reduce energy intensity by up to 66% by 2035• Up to $5,000 billion investment opportunity
Maturing private equity markets
• Doubled to over 10% of global investment in last decade• Strong investment performance vs. comparables
Compelling downside protection
• Highly diversified portfolio across 150 projects• Preferred return mechanism significantly enhances risk / reward profile
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GEEREF team
Cyrille ArnouldHead of GEEREF
Mervin ChaumiereLegal
Dr Gunter Fischer Principal Officer
Mónica ArévaloInvestment Officer
Nicolas Panayotopoulos
Legal
Dirk RoosPJ
Monty HowardPJ
David WalkerSenior Advisor
Ioannis TsakirisSenior Advisor
Jenia Ganzen
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Structure
A Shares: Public Sponsors
GEEREF compartment
Norway€14m
Germany€24m
EU€74m
Subscription Agreements
GEEREF Front Office
B Units: Private Investors
EC€74m
EC€74m
EC€74m
LP
LP
LP
GEEREF Investment Committee
Umbrella SIF(European Initiative on Clean, Renewable Energy, Energy Efficiency and Climate Change
related to Development SICAV, SIF
SIF Board of Directors
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