EPEC – Private sector Forum II
Europe 2020 – A view of the future
Brussels
June 2nd 2010
2nd of June 2010
European Investment Bank
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The European Investment Bank (EIB)
Long-term finance promoting European objectives
European Union’s long-term lending bank set up in
1958 by the Treaty of Rome.
Shareholders: 27 EU Member States
Governance
Board of Governors – EU Finance Ministers
Board of Directors - Member States & European
Commission
Management Committee –EIB’s executive body
Audit Committee – independent, non-resident
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European Investment Bank
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The European Investment Bank (EIB)
European priority objectives
Within the Union:
Cohesion and convergence
Small and medium-sized enterprises (SMEs)
Environmental sustainability
Knowledge Economy
Trans-European Networks (TENs)
Sustainable, competitive and secure energy
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Trans-European transport network (TEN-T)
Progress until end 2009
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Infrastructure financing needs – Transport TransEuropean Networks (TEN)
The estimated TEN-T investment requirement in 2007-2013 is ca.
€390bn
Potential Sources of Finance:
National Public resources finance ca. 40-50%
Private sector risk finance needed to finance 20-25%
EIB loans finance ca. 15-20% of TENs investments
Commission resources (Structural Funds and TENs)
cover ca. 15%
Source: DG MOVE, EIB
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EIB’s support for Trans-European Networks (TENs)
Large transport and energy infrastructure networks
Transport supporting development and integration
Security and diversification of internal energy supply
Loans of EUR 12.7bn in EU in 2009:
EUR 10.7bn for TEN Transport
EUR 2.0bn for TEN Energy
Total loans of EUR 49.9bn 2005-2009
EUR 42.9bn for TEN Transport
EUR 6.9bn for TEN Energy
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Clear step-up in EIB TEN lending activity
Total TEN signatures (EUR bn)
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2004
2005
EIB Funding
2006
2004
2007
2005
2006
2008
2007
2009
2008
2009
TEN
7.9
8.2
8.3
9.7
12.6
13.9
TEN-E
1.3
0.9
0.4
1.4
2.7
2.0
TEN-T
6.6
7.3
7.9
8.3
9.9
11.9
Priority Projects
2.2
2.9
2.7
3.1
3.2
1.8
Other Projects
4.4
4.4
5.2
5.2
6.7
10.1
PPP in TEN-T
0.3
0.2
1.3
0.9
2.9
1.1
Senior loans
6.6
7.1
7.9
7.8
8.3
11.1
SFF in TEN-T
0.0
0.2
0.0
0.5
1.6
0.8
40%
42%
37%
46%
27%
TEN-T
Percentage of total TENT in Rail
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European Investment Bank
27%
7
In addition to standard EIB Senior loans for TENs projects, EIB also
provides:
Structured Finance Facility (SFF): to fund projects with a higher risk profile and enable equity
financing; mezzanine and guarantee operations for infrastructure schemes
Loan Guarantee Instrument for TEN Transport projects (LGTT): EUR 5 bn EIB guarantee
programme for which EUR 1 bn risk capital has been jointly provided by the EIB and EU budget.
LGTT shares the revenue risk in the early years of TENs 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
European Clean Transport Facility (ECTF) is a major EIB financing programme to support
investments targeting RDI (Research, Development and Innovation); emissions reduction and
energy efficiency in the European transport industry. EIB lending under the ECTF facility currently
amount to EUR 4.2 bn and targets automotive (OEMs/Suppliers), railroad, aircraft and shipping
industries as well as related infrastructure.
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EIB as a financier of PPPs
• PPP an important additional instrument for infrastructure investment
• Since 1990, EIB has progressively broadened geographic and sectoral spread of its
PPP lending
• The Bank is now Europe’s foremost funder of PPP projects. Portfolio of 120 projects
and investment of around EUR 25 billion
• Signatures in 2008 in excess of EUR 3.5 billion. Despite difficult economic conditions
in 2009, signatures exceeded EUR 2 billion.
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EIB support for major transport PPPs
2008
2009
INFRABEL RAIL TUNNEL PPP (BE) - €313m
AUTOBAHN A-5 PPP TEN (DE) - €225m
METRO DE MADRID IV- TR C (ES) - €50m
METRO DE SEVILLA DBFO 1&2 (ES) - €10m
AUTOVIAS RENOVACION PPP (ES) - €211m
M25 WIDENING TRANCHE A (GB) - €448m
AUTOROUTE A 19 (TEN/SFF) (FR) - €200m
M80 MOTORWAY PPP (GB) - €157m
TRAMWAY DE REIMS PPP (FR) - €107m
SCUT ACORES (PPP) TRANCHE BST (PT) - €60m
AUTOROUTE A88 PPP (FR) - €102m
SCUT ACORES (PPP) TRANCHE BBVA (PT) - €60m
E-K-P-P-T MOTORWAY PPP PROJECT (GR) - €200m
BAIXO ALENTEJO MOTORWAY (PT) - €225m
M6 DUNAUJVAROS-SZEKSZARD (HU) - €200m
AEROPORTI DI ROMA II (IT) - €80m
2ND COEN TUNNEL PPP (NL) - €194
A1 MOTORWAY - 2ND PHASE (PL) - €575m
DOURO LITORAL PPP (IC 24) (PT) - €350m
IP4 AMARANTE-VILA REAL (PT) - €200m
TRANSMONTANA MOTORWAY (PT) - €289m
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EIB Structured Finance Facility - SFF
Purpose of SFF is to create value added by financing riskier parts of selected
transactions and by increasing EIB leverage and financing capacity. EIB’s total
SFF financing of EUR 4.2 bn in 2008, EUR 5.8 bn in 2009
Corporate Ratings
Moody's S&P and Fitch
…
…
A1
A+
A2
A
A3
ABaa1
BBB+
Baa2
BBB
Baa3
BBBBa1
BB+
Ba2
BB
Ba3
BBB1
B+
…
…
SFF Target Companies
risk profile
SFF allows EIB to increase the leverage on its own Funds and those of the EU
Budget through Structured Finance
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LGTT – EUR 5 bn Loan Guarantee instrument
LGTT is a specialized risk based instrument developed by the EIB in
cooperation with the European Commission.
The LGTT Guarantee Facility is designed to provide contingent mezzanine
debt and thereby to protect senior debt in TENs projects that are exposed
to traffic risk.
It provides up to 20% of additional mezzanine debt funds to meet traffic
down side scenarios
LGTT makes the capital structure more robust to traffic; project and
financial uncertainties
In current market circumstances, LGTT proved decisive to attract senior
lenders and to close PPP projects with traffic risk components.
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LGTT – State of play
The pipeline at the end of 2009 stands at 17 active projects
The project pipeline is estimated to represent 20 projects by the
end of 2010 and roughly 25 - 35 projects by the end of 2011.
LGTT is fully on track, facilitating the progress of traffic based PPP
throughout the Union.
It covers the majority of eligible deals in the market.
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Technical Assistance – JASPERS
Joint Assistance to Support Projects in the European Regions
Joint policy initiative of EIB, DG REGIO, EBRD and KfW
Assistance for absorption of Structural & Cohesion Funds period
2007 to 2013
Assistance with project presentation and identification
Analysis of horizontal issues such as grant/loan blending
Project implementation support to follow in second phase
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European Clean Transport Facility (ECTF)
ECTF facility is targeting RDI (Research, Development and Innovation) investments in
emission reduction and energy efficiency in the European transport industry.
This Risk Sharing facility targets larger scale investments with corporate sponsors (or project
finance structures).
Such risk-sharing facility is used for example for investments in:
(i)
intelligent traffic management (e.g. variable message signs, advanced traveller
information systems, advanced driver’s assistance, speed advisory/control, electronic
tolls, etc.), and
(ii)
“Smart” vehicles (e.g. Advanced Drivers’ Assistance, accident sensors, automated guided
vehicles, navigation systems, inter-vehicle communications systems etc.), and “Green”
vehicles (application of ICT in reducing the congestion of vehicles).
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EIB Fund Investments
Fund
Emerging Europe Convergence Fund
Dexia Southern EU Infrastructure Fund
Dutch/Northern EU Infrastructure Fund
Barclays European Infrastructure Fund
San Paolo IMI Infrastructure Fund
Enercap Power Fund
Fund Commitment
Total EIB Commitment
First closing
EUR (M)
EUR (M)
Aug-05
655
50
Mar-06
120
25
Aug-05
121
15
Jul-06
315
28
Dec-06
120
18
Jun-07
98
25
Sep-07
314
25
Aug-07
1531
35
Oct-06
547
50
Dec-07
41
15
May-08
96
15
Dec-08
220
35
May-09
85
17
Dec-09
175
50
DIF Renewable Energy Fund
Mid Europa Fund III
Meridiam Infrastructure Fund
Green Alliance Renewable Fund
Espirito Santo Infrastructure Fund
DIF Infrastructure Fund II
Dasos Timberland Fund I
Meridiam Infrastructure Fund II
SE Europe Energy Efficiency Fund
Dec-09
2020 European Fund for Energy, Climate
Change & Infrastructure [Marguerite]
Total
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Dec-09
95
25
710
100
5243
528
European Investment Bank
Geographical Focus
Sector Focus
CEE
ITC expansion
FR, IT, ES, PT
PPP
NW Europe
PPP
UK, IE, FR, DE
PPP
IT
PPP
CEE
Renewable Energy
Benelux, FR, DE,
Scandinavia
Renewable Energy
Central & Eastern Europe
ITC expansion
EU
PPP
ES,PT
Renewable Energy
ES,PT
Renewable Energy
NW Europe
PPP / Renewable
Energy
Worldwide (40% Europe)
Timberland assets
EU
PPP
SE Europe including
Turkey
Energy Efficiency &
Renewable Energy
EU
Renewable Energy,
TEN-T, TEN-E
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2020 European Fund for Energy, Climate Change and
Infrastructure – the Marguerite Fund

The Fund targets an equity base of EUR 1.5bn and an associated Debt CoFinancing Initiative (DCI) of EUR 5bn

Major publicly funded Core Sponsors (EIB, CDC, CDP, ICO, PKO and KfW) as
well as the European Commission, CGD and Bank of Valetta are backing this
Fund; also Nordic Investment Bank and Black Sea Trade & Development
Bank support it through the Debt Co-financing Initiative. Public and private
sector investors from all EU countries are expected to join at a later stage.

Target sectors: TEN-T, energy and climate change

Focus on solid IRR targets - Fund to give preference to projects with
satisfactory Economic Rates of Return (ERR)

Expected to be a model in the future for other similar public and private funds so
as to attract Capital Market Institutions (including private and public pension
funds and insurance companies) to invest in TENs infrastructure
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Future Financing of Trans-European Networks (TEN)
Comprehensive Network EU 27, 2020 horizon
Transeuropean Transport Network
2007-2013
EU 27
Cost (€ billion)
TEN-T Basic Network
- New Member States (EU 12)
- Old Member States (EU 15)
Community contribution (€ billion)
Programme TEN-T
Cohesion Fund
ERDF (regions convergence )
EIB Loans and guarantees (estimated)
Total Community contribution (€ billion)
Grants
Grants and Loans
52
112-122
Balance to be financed from public (national) or
private sources
270-280
390
70
320
8
35
9
60-70
TEN-T investment programme is so large that there is currently uncertainties
relating to the scale of investments and the way it is to be financed.
Continued EIB effort to develop private sector participation in TENs
funding
Source: DG MOVE, EIB
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Ideas on Future Financing of TEN-T
Europe 2020 Strategy – Communication from the EC
Europe 2020 Strategy
Priority 1: Smart growth (Innovation, Education, Digital Society)
Priority 2: Sustainable growth (Climate, Energy and Mobility,
Competitiveness)
Priority 3: Inclusive growth (Employment and Skills, Fighting
Poverty)
4 Working Groups to determine how the EIB can best support the new
policy framework
Preliminary outcomes
A lot can already be done with our current offering
However, to close “market gaps”, the Bank may need to expand
or develop
Ways to leverage EU Budgetary funds
Risk-sharing activities
Capital-light structures
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EIB’s Role in Facilitating additional TEN-T investment
Facilitating Investment by Capital Market Institutions in infrastructure through
guarantee and subordinated debt instruments
Establishing Equity Funds to finance TEN-T Infrastructure such as the 2020
European Fund for Energy, Climate Change and Infrastructure – the Marguerite
Fund
Improvement of the coordination of EU Funds
Expand the development of knowledge sharing/expertise advice such as EPEC
and JASPERS
European Clean Transport Facility (ECTF)
Possible broadening of the scope of LGTT
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Expansion of Investment by Capital Market
Institutions
Facilitation of the issuance of bonds through subordinated debt
instruments
Greater availability of subordinated debt
tranches could enhance the credit of projects.
The size of this tranche would depend on the
risk profile of the project/portfolio as the
purpose is to uplift the credit profile of the
higher ranking senior debt financing to single-A
rating
Institutional investors would be interested to
invest in the sector. The subordinated tranche
could, inter alia, be provided on contingent
basis by EIB (subject to its standard credit and
other requirements), which would make it
similar in structure to LGTT,
Suitable for risk sharing between public and
private institutions.
TEN-T budget could contribute to such
instrument through risk sharing.
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Senior
Tranche –
Project Bond
Subordinated
Tranche
Shareholder
funding
European Investment Bank
Target rating
A/AA
Size depends on
the project
Normal or elevated
level of
equity/shareholder/mez
zanine debt
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Ideas on Future Financing of TEN-T
Possible broadening of the scope of LGTT
In order to reach a larger pool of candidate projects, EIB/EC consider that
broadening the scope of LGTT to availability-based schemes is worth
examination.
This would allow targeting significant investments in the rail and inland waterway
projects which are in many cases being procured as availability-payment –based
PPPs.
A clear focus would be to introduce even stronger support for TEN-T priority
Projects, most of them in the Rail sector, but also including priority projects like
SESAR or Canal Seine Nord.
This innovation could substantially open Rail PPPs to Capital Market Financing
and provide ground braking solution for difficult multi-national projects like
SESAR.
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Guarantee for Availability based Projects
Definition / Objectives
Unfunded guarantee instrument designed to enhance the credit of
the project.
The unfunded nature provides a supplementary buffer to down
sides, as they exceed the project funding and are more cost
efficient.
Encourage primarily the bond but also the bank debt financing of
TEN-T railway projects
The GAP Facility would:
• Improve the rating be assigned to the senior debt/bonds to A,
AA-levels;
• Consequently
• enable certain institutional investors to invest in an asset class that
matches their own liabilities;
• maximise provided service to institutional investors lacking
specialist expertise in the sector, project finance or PPPs
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Improvement of the Coordination of EU Funds
The TEN-T budget and Cohesion Fund are among the most important providers of Community
support for the implementation of the TEN-T projects
Their roles, availability, as well as the way they are managed vary substantially.
An improved system of coordination could be envisaged, perhaps based on EC/EIB/National
Task Forces
These task forces could i) assists national authorities to make the best use of the available
Community resources and ii) oversee and coordinate the implementation of the TEN-T
network, ensuring the commitment to individual projects.
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Contacts
Thomas C. Barrett, Director
Barrett@eib.org, tel: +352 43 79 87006
Institutional and Operational
Policies within the EU:
Jukka Luukkanen, Head of Division
Luukkane@eib.org, tel +352 43 79 86412
Alfredo Panarella
Head of Unit
PANARELL@eib.org,
tel. (+32)(0)2 235 00 82
Matthias Woitok, Deputy Head of Division - LGTT
m.woitok@eib.org, tel: +352 43 79 87336
José Brito
Liaison with European Parliament
britoant@eib.org,
tel. (+32)(0)2 235 00 76
http://www.eib.org
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European Investment Bank
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