EIB Financing of RDI in Energy
Elisabetta Cucchi
Policy Officer
Institutional Strategy Department
Brussels 29 October 2013
2
1. EIB: profile and objectives
2. EIB instruments to support RDI in energy
3. Expected developments in MFF 2014-2020
Table of Contents
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1. EIB: profile and objectives
4
European Investment Bank Profile
EIB was created by the Treaty of Rome in 1958
EIB is a not-for-profit, EU policy driven institution
EIB is 100% owned by the 27 EU member states
EIB has subscribed capital of EUR 232.4 bn as of 2011 (before EUR 10bncapital increase)
EIB is AAA/Aaa rated by Moody’s, S&P and Fitch with stable outlook
EIB funds itself on the capital markets: EUR 71 bn in 2012
EIB signed loans amounting to EUR 50 bn in 2012 (EUR 44bn in EU)
EIB is the largest multilateral financing institution,
EIB is the majority shareholder in the European Investment Fund
For more information, please visit: www.eib.org
The European Investment Bank is the European Union‘s long-term financing institution. The Bank
acts as an autonomous body set up to finance capital investments furthering European integration
by promoting EU policies.
5
EIB: Supporting European priority objectives
Convergence
Small and medium-sized enterprises (SMEs) and
mid-cap enterprises (midcaps)
Environmental sustainability
Knowledge Economy
Trans-European Networks (TENs)
Sustainable, competitive and secure energy
6
EIB support to the Energy Sector
0
2
4
6
8
10
12
14
16
18
20
2007 2008 2009 2010 2011 2012
EUR bn Renewable Energy
Energy Efficiency
Energy Networks
Security of supply
On average 15-20% of EIB total yearly lending
In 2012 energy loans of EUR 8.4 bn (EUR 7.2bn inside the EU and EUR 1.2bn outside the EU)
In 2012 EUR 2.8 bn to RE and EUR 0.8bn to EE
Recent Energy Review prioritises “no regrets” sectors : energy efficiency, renewable energy,
networks and RDI
7 7
EIB is lending considerable sums to renewable energy projects.
EIB contribution to Renewable Energy
European Investment Bank – 2013 EIBI Conference| Brussels 26.06.2013
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2008 2009 2010 2011 2012
EUR m Biofuel - manufacturing
Biomass/Biofuel
Geothermal power stations
Hydroelectric power stations
RE dedicated transm. lines
RE sources miscellaneous sectors
Solar Energy (incl. manufacturing)
Wind Energy (incl. manufacturing)
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Total signatures in support of the Knowledge Economy over 2000-2012: EUR 123 billion
Breakdown by objective: 50% R&D, 27% Innovation and 21% education & training, 2% other
Transaction sizes for RDI have ranged from EUR 8m to EUR 600m
Approximately 50% of the transactions were pure private sector investments
EIB financing of the Knowledge Economy
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
To
tal L
oan
Vo
lum
e (
M E
UR
)
Innovation
Education and Training
R&D
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2. EIB instruments to support RDI in energy
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Knowledge transfer,
Early-stage
Equity for Venture Capital,
Mezzanine Funds Debt
Entrepreneur, friends, family
Business Angels
Seed/Early Stage VC Funds
Formal VC Funds
Bank Loans and Guarantees
Seed / Start-Up Phase Emerging Growth Phase Development Phase Later Stage
Counterparts
EIF EIB
The European Investment Bank Group
EIB Group Product Offer for RDI
Bank Loans and Guarantees
Facility: Competitiveness
and Innovation Programme
(CIP), Ecotech, EIB Risk
Capital Mandate
Purpose: IP financing,
technology transfer, seed
financing, investment
readiness, early-stage VC
Target Group: VC Funds,
Business Angels,
Universities
Competitiveness and
Innovation Programme
(CIP), EIB Risk Capital
Mandate, Fund of funds
mandates
Growth financing for SMEs,
mid-caps
Formal VC Funds, Mezz
funds
RSFF, RSI (RSFF for SMEs; new product in
development) EIB loans, CIP
EIB own funds RDI financing,
SMEs/MidCaps, Banks, PE Investors (sub-
investment grade), Corporates, Public Sector
entities
Loans (incl. Mezzanine), Funded Risk
Sharing Facilities with Banks
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Direct Lending Indirect Lending / Financing
EU
Corporate / Project Financing Senior Loans (pari passu)
Subordinated Debt
Financial Intermediaries
(extend lending capacity)
Risk Sharing
Co-financing
1 2
Aaa Aa A (Baa3) Ba B
RSFF [up to EUR 10bn
assuming
leverage of 5.0x ]
Risk Sharing Finance Facility (RSFF)
RSFF Value Added Proposition
Competitive terms and pricing
Long Maturities of up to 10 years
Large single loan sizes (< EUR 300m)
Strong technology/industry expertise
No cross selling / Take and hold strategy
Signaling Effect: EIB as quality stamp
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RSI Facility under RSFF:
Under the indirect financing approach, the EIB
Group shares risk of up to 50% of loans from
house-banks to innovative SMEs and small
Mid Caps (up to 500 employees) under RSI.
Loan amounts can range from EUR 25,000 to
EUR 7.5m
Loan maturities range from 2 years to 7 years;
The key operational handling of the product is
designed to be straight forward to operate and
manage (simplicity is key);
The product provides capital relief for the
financial intermediary;
Indirect Financing under RSFF/RSI
Product Structure Chart
Bank
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RSFF Results to end Q3 2013*
887
1,502
4,187
2,117
713
3,338
2,393
459
1,024
2,984
1,839
973
2,795
1,227
323 169
1,497 1,527
1,266
1,646
2,308
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
4,500.0
2007 2008 2009 2010 2011 2012 2013
Approvals
Signatures
Disbursements
2.7bn
Cumulative
RSFF Business Annual RSFF Business 2007-2013
2007-2013
15.1bn
11.3bn
8.7bn
* Provisional figures
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RSFF Results to to end Q3 2013
Active Operations – Distribution by Country
To date direct RSFF operations have been signed in 23 countries.
Under RSI, EIF has signed agreements with 16 intermediaries in 13 countries.
1
1
1
2
1
3
2
1
2
1
1
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RSFF Results to end Q3 2013
Active Operations – Distribution by Sector
ICT 17% Life Science &
Speciality Chemicals 22%
Engineering & Industry
40%
Energy 15%
Research Infra. 6%
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RSFF in support of energy
Project Name Total ABENGOA RDI LOAN 49.0 ACCIONA RDI 185.0 ANDASOL SOLAR THERMAL POWER 60.0 ANDASOL SOLAR THERMAL POWER II 60.0 BORKUM WEST II OFFSHORE WINDPARK 105.5 ELDEPASCO NORTHWIND OFFSHORE WIND 133.0 GAMESA RDI 260.0 GAMESA WIND POWER RDI II 160.0 GLOBAL TECH I OFFSHORE WINDPARK 100.0 INGETEAM GREEN ENERGY TECH RDI 45.0 SOLNOVA 1&3 CONCENTRATED SOLAR POWER 110.0 SOLUCAR SOLAR THERMAL POWER 50.0 THERMOSOLAR GEMASOLAR SPAIN 80.0 ACS RDI 98.0
1,495.5
• EIB involvement: COM Decision calls on EIB and its expertise in certain areas.
• Allocates 2 advisory tasks to the Bank: a) Due Diligence of Project Applications; b) Monetisation of EU CO2 allowances.
• 1st round: 200 M EU CO2 allowances ; ~EUR 1.2 billion funding awarded.
• Funding is in principle = 50% of extra investment and operating costs for demonstration (“Relevant Cost”).
• Funding for 23 RES projects, 8 bioenergy projects out of 24 applications.
Innovation – NER300 1ST Call Results
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Other EIB instruments for innovative RE projects
ELENA:
Joint initiative of EC and EIB to support legal and regional authorities in the implementation of
investment programmes in EE/RE/UT. Provides grant financing covering up to 90% of TA needed to
prepare, implementation and finance investment projects.
Investments in Equity Funds:
EIB invests in equity funds, e.g. Marguerite, which in turn take direct equity participations in
infrastructure investments.
European PPP Expertise Centre (EPEC):
Expertise service provided by the EIB and European Commission to support programme and policy
development as well as best practice by the public sector for PPP transactions.
Joint Assistance to Support Projects in the European Regions (JASPERS):
A joint policy initiative of EIB, DG REGIO, EBRD and KfW to provide assistance for absorption of
Structural & Cohesion Funds period 2007 to 2013.
JESSICA (Joint European Support for Sustainable Investment in City Areas):):
to finance Integrated, sustainable urban-renewal projects via a range of sophisticated financial tools
(including equity investments, loans and guarantees), offering new opportunities for the use of EU
Structural Funds.
RDI advisory: joint initiative of EIB and DG RTD in the context of RSFF to help improve the
investment readiness and access to appropriate financing of EU projects.
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3. Expected developments in MFF 2014-2020
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RSFF Vision for MFF 2014-2020 What is the current role of Mid-Caps in the RSFF portfolio?
Even though technically/legally possible (> EUR 7.5m), RSFF has so far not sufficiently targeted R&D intensive Mid Caps; so far only 4.6% of direct RSFF financings (or 8 Mid Caps out of >5,000).
Experience shows that the direct intervention
model via RSFF is geared towards larger
transactions starting from ca. EUR 25m. Smaller
direct transactions with SMEs and Mid-Caps are
the exception and do not reach a satisfying level
of scale and market share (see chart besides).
A complementary indirect RSFF financing model
to provide senior debt financing was one of the
original RSFF objectives back at its set-up in
2007; based on the successful RSI model, an
intermediated Mid-Cap risk sharing product
would allow RSFF to reach this segment with a
significant improvement in scale, cost efficiency
and leverage.
A more streamlined structure to provide hybrid
debt financing directly mainly through co-
investment is important as a complementary
measure to reach more efficiently mid-caps with
high-value added financings supporting RDI
investments.
Mid Caps:
5%
Large Caps
75%
SPVs / RIs
20%
Signed Direct RSFF Financings:
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RSFF Vision for MFF 2014-2020 Where are the gaps in the EIB Group product offering?
EIB Global Loans
EUR 7.5m EUR 25m EUR 300m
RSI: Innovative SMEs
CIP: SMEs
Hig
h R
ISK
L
ow
EUR 25K
EIB/EIF Mid-Cap RSI
EIB Investment Loans/Guarantees
EIB RSFF
Individual RDI Loans
Fund of Funds Focus: SMEs (40% Buy-Out)
Av. Ticket Size: EUR 1.8m
RSFF GFI Direct (Co-)Investments
Pure RDI Invest. Focus
Mid-Caps only
Av. Ticket Size: EUR 15m
SIZE OF SINGLE TRANSACTION
Fu
nd
ing
Pre-seed
Seed
Funding
Start-up / Mezzanine/Growth Commercialization / Industrialization Growth / Stability Ph
ases
1st Valley of Death
2nd Valley of Death
EIF
Fu
nd
of
Fu
nd
s
Ap
pro
ach
D
eb
t P
F G
uara
nte
es
E
IB R
SF
F (
EC
) E
IB O
wn C
apital
Legend:
RSFF Innovation
Financing
Gap
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RSFF Vision for MFF 2014-2020 How do the new initiatives fit into the EIB Group product offering?
EIB Global Loans
EUR 7.5m EUR 25m EUR 300m
RSI: Innovative SMEs
CIP: SMEs
Hig
h R
ISK
L
ow
EUR 25K
EIB/EIF MCI
EIB Investment Loans/Guarantees
EIB RSFF
Individual RDI Loans
Fund of Funds Focus: SMEs (40% Buy-Out)
Av. Ticket Size: EUR 1.8m
RSFF GFI Direct (Co-)Investments
Pure RDI Invest. Focus
Mid-Caps only
Av. Ticket Size: EUR 15m
SIZE OF SINGLE TRANSACTION
Fu
nd
ing
Pre-seed
Seed
Funding
Start-up / Mezzanine/Growth Commercialization / Industrialization Growth / Stability Ph
ases
1st Valley of Death
2nd Valley of Death
EIF
Fu
nd
of
Fu
nd
s
Ap
pro
ach
D
eb
t P
F G
uara
nte
es
E
IB R
SF
F (
EC
) E
IB O
wn C
apital
Legend:
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Thank you for your attention!
Elisabetta Cucchi
www.eib.org
European Investment Bank – 2013 EIBI Conference| Brussels 26.06.2013