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JESSICA and Investment Funds European Investment Bank Brussels, 28 June 2011 Selecting UDFs Learning from EIB Calls for Expression of Interest Gianni Carbonaro.

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Presentation on theme: "JESSICA and Investment Funds European Investment Bank Brussels, 28 June 2011 Selecting UDFs Learning from EIB Calls for Expression of Interest Gianni Carbonaro."— Presentation transcript:

1 JESSICA and Investment Funds European Investment Bank Brussels, 28 June 2011 Selecting UDFs Learning from EIB Calls for Expression of Interest Gianni Carbonaro / Rakesh Bhana

2 2 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

3 3 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

4 4 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

5 5 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

6 6 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

7 7 CriterionScoring Investment Strategy0-20 Financial forecasts of the UDF0-25 Management fees0-10 Project portfolio and management team0-25 Ownership and governance structure, risk management and control procedures 0-20 Total Score0-100 Offers Evaluation Principles Example of Award Criteria

8 8 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 10 UDFs signed 31 UDFs expected

9 9 Signature of Operational Agreement CEoI Launch 3 to 5 months CEoI Close 1 month Min 4 months achieved 2 to 4 months Min 0.5 months achieved Min 5 months achieved Calls for EoI – compressing timescales… Investments Current target timeframe for most calls 3 to 5 months timescale reduced from build-up of experience streamlined procedures, more standardisation

10 10 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

11 11 Business plans: illustration 16 Projects £200 million total spend £70 million from UDF

12 12 The negotiation phase : possible issues Fees (e.g. unforeseen costs arising) Risk sharing mechanisms Maximising co-investment Appropriate reporting requirements Recycling mechanism

13 13 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

14 14 JESSICA and Investment Funds European Investment Bank Bvd Konrad Adenauer, L-2950 Luxembourg


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