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Financing for Research & Development

Luigi ArmeliSenior Loan Officer

Financial Institutions and Human Capital

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STRUCTURE OF PRESENTATION

1. Innovation 2010 Initiative: investing in human capital.

2. University financing: the situation in Italy.

3. Big requirement for infrastructure upgrading…

4. … but limited public funds.

5. Considerable potential for raising external resources.

6. Some examples.

7. The EIB, an institutional financial partner.

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The i2i initiative, which was launched by the EIB to meet the objectives laid down by the 2000 Lisbon European Council, focuses on three priorities:

1. Innovation 2010 Initiative: investing in human capital

European InvestmentBank

education and training;

research and development;

information and communications technology networks

with the general aim of raising up to EUR 50bn in financial resources between 2000 and 2010.

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In the past two years, the EIB has implemented a structural support programme for Italy’s higher education system, targeting both universities and the institutional players concerned (Ministry for Universities and Research, local authorities, banking foundations).

In 2005-2006, the EIB approved loans totalling over EUR 800m in favour of Italian universities, of which EUR 300m have already been signed.

The EIB is now perceived as playing a key role in financing the university system in Italy.

2. University financing: the situation in Italy European InvestmentBank

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Universities are generally located in city centres, in buildings that are of great historical value but often run-down, overcrowded and ill-suited to modern educational standards (student areas, upgrading of IT systems, associated facilities).

Research activities (especially in technical and scientific faculties) require ever more costly laboratories and high-tech equipment as well as infrastructure that complies with the applicable safety and pollution regulations.

3. Big requirement for infrastructure upgrading…

European InvestmentBank

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Gradual restriction of public contributions in view of the limits imposed by the Stability Pact.

Ordinary financing (70% of public universities’ revenue on average) primarily used to cover staff costs.

Criteria governing the distribution of resources are still too rigid (despite some recent improvements).

Major delays in receiving ordinary public transfers.

4. … but limited public funds European InvestmentBank

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Own resources… Enhancing the value of real estate assets (via a

change in accounting practices for universities). Systematic exploitation of the results of research

(patents, spin-offs, venture capital). Partnerships with the private sector.

5. Considerable potential for raising external resources

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… and debt-servicing capacity. Financial autonomy with respect to central

institutions (within the statutory prudential limits). Debt sustainable in the long term in accordance

with operating margins.

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Politecnico di Milano (EUR 150m): example of effective cooperation between the City and the university in the context of a major urban regeneration project in a former industrial area.

Politecnico di Torino (EUR 40m): strategic partnership with General Motors in the field of automotive research.

La Sapienza University (under appraisal) and Bologna University (EUR 120m): Italy’s two largest universities, undergoing decentralisation.

San Raffaele di Milano (EUR 200m): synergies between teaching, scientific research and medical applications.

6.1. Some examples European InvestmentBank

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Trento University (EUR 150m): first bond issue by an Italian university and a partnership with Microsoft for IT applications in the field of biological sciences.

Bocconi University (EUR 120m): establishment of a university campus in the centre of Milan.

Politecnici Italiani Student Loan (EUR 25m): direct support for poorer students with the cooperation of universities and the Banca Intesa network.

6.2. Some examples European InvestmentBank

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The value added of EIB participation: Long-term support (generally up to 25 years) for

universities’ investment plans. Possibility of fixed-rate financing over long periods

at the keenest market terms. Focus on the quality of projects and the feasibility

of investment programmes. Sharing of financial models with universities and

joint assessment of their ability to bear the debt burden.

Capacity for involving other institutional players (e.g. banking foundations).

7. The EIB, an institutional financial partner

European InvestmentBank

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