Selecting UDFs
Learning from EIB
Calls for Expression of Interest
Gianni Carbonaro / Rakesh Bhana
JESSICA and Investment Funds
European Investment Bank
Brussels, 28 June 2011
Calls for EoI
Part of a learning process…
Based on the EIB experience under current HF
mandates
EIB acting on behalf of MA on a non-profit basis
Moving up the learning curve together with other
stakeholders
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Calls for EoI: General Rationale
 Ensuring maximum coherence with the investment strategy
 Clarifying the context and identifying relevant priorities
 Enabling candidates to offer a high-quality business plan
 Building strong incentives for cost-effective UDF performance
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The Call – a Guided Tour …
 Annex 1 – General Information about the Applicant
 Annex 2 – Declarations to be made by the Applicant
 eg. Entry in trade registers, representations on not being subject to insolvency proceedings,
conflicts of interest, compliance with public law obligations (tax, social security)
 eg. Statement of relevant experience (execution of relevant/related Urban Projects and roles
held by the applicant in the project)
 Annex 3 – Terms of Reference
 Amount allocated to the Call for EoI
 Selection procedure and criteria (exclusion and selection criteria)
 Business Plan template
 Characteristics of potential Urban Projects
 Financial model
 Conditions for the financial products
 Management fee
 Award criteria
 Selected Terms of the Operational Agreement
 Instructions on Financial Forecasts and Operational Budget of the UDFs, incl. financial
statements template
 Instructions on Economic Analysis of Urban Projects
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EoIs Evaluation Principles
 Exclusion criteria
• Bankruptcy or analogous situation
• Professional misconduct
• Non-fulfilment of social security and tax payment obligations
• Criminal conviction
• Proof of misrepresentation
 Selection criteria
• Proper submission of the relevant documentation and supporting
material as specified in the Call for EoI
• Possession of adequate experience
• Completion of declarations to the satisfaction of EIB
• Co-investment: ability of the UDF managers to provide own resources
for investment or attract third party co-investment
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Criteria for Urban Projects
 General criteria
• EU Structural Fund and State Aid regulations
• Soundness of business model
• Experience of the applicant
 Criteria related to OP
• Eligible Expenditure
• OP objectives
• Investment by end-2015
 Financial and economic criteria
(will vary according to projects)
•
•
Financial performance indicators
Economic performance and impact assessment
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Offers Evaluation Principles
Example of Award Criteria
Criterion
Scoring
Investment Strategy
0-20
Financial forecasts of the UDF
0-25
Management fees
0-10
Project portfolio and management team
0-25
Ownership and governance structure, risk management and
control procedures
0-20
Total Score
0-100
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Calls for EoI : key figures
Across 15 EIB Holding Funds :
17 Calls launched
14 closed
 71 valid EoI received
 17 UDFs selected, including
Commercial Bank
Public Bank
Private equity / infrastructure fund
Public institution
Savings bank financial services unit
Selected UDF managers
 10 UDFs signed
 31 UDFs expected
6%
6%
Commercial bank
47%
Public bank
Private equity fund
29%
Public institution
Other
12%
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Calls for EoI – compressing timescales…
1 month
CEoI
Close
Min 0.5 months
achieved
CEoI
Launch
2 to 4
months
Min 4 months
achieved
Signature of
Operational
Agreement
Investments
3 to 5 months
Min 5 months
achieved
Current target timeframe for most calls 3 to 5 months
•
timescale reduced from build-up of experience
•
streamlined procedures, more standardisation
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Business plans
 UDF business plans: strengths …
 Concise, clear, credible
 Demonstrate compliance with mandatory limits
Fees
Disbursement timeframe
 Evidence of compliance with OP requirements
 Diversified portfolio of investments
 … and weaknesses:
 Unrealistic financial projections
 Poorly identified project pipeline
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Business plans: illustration
• 16 Projects
• £200 million total spend
• £70 million from UDF
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The negotiation phase : possible issues
Fees (e.g. unforeseen costs arising)
Risk sharing mechanisms
Maximising co-investment
Appropriate reporting requirements
Recycling mechanism
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Learning by doing for stakeholders …
 For cities
• Interaction with the MA
• Project preparation/elaboration
• Satisfy the integrated plan requirements
• Start project preparation and elaboration work ASAP
 For candidate UDFs
• Know the OP
• Diversified project portfolio
• Engage with municipalities/MA/others on IPSUDs
 For project promoters
• Know the OP
• Preparation/elaboration of projects
• Engage with municipalities/MA/others on IPSUDs
• Start project preparation and elaboration ASAP
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JESSICA and Investment Funds
European Investment Bank
98-100 Bvd Konrad Adenauer, L-2950 Luxembourg
www.eib.org/jessica
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