Implementing SRAs : A possible role for EIB (II) Jean-Jacques Mertens Head Research and Innovation EIB – Projects Directorate The EUs long-term financing institution

ETP Seminar Brussels 16/12/05 2 Challenges in Financing of Research For EIB, two major operational challenges when considering lending to RDI projects: Be certain of the relevance and validity of the planned facility and/or activity Lending to multi-type consortia: partners of different kinds, purpose and financial power (creditworthiness)

ETP Seminar Brussels 16/12/05 3 RDI project examples Past Industrial RDI (pilot plants, labs, research activities) (Boehringer Ingelheim, Gambro, Robert Bosch, Roche Diagnostics, Novozymes, Haldor Topsoe) Prototypes (Primorec: Valorizing steel waste) Research organisations ( Heavy Ion Therapy, Mario Negri, Statens Serum Institute) Large Infrastructures (LHC of CERN, IMEC, FEL Trieste) Science parks, incubators (EMBL, Helsinki, Oulu, Turku) Specific global loans for innovative SMEs (ICO, SPIMI, IWT) Future: also projects generated by Technology Platforms (H2, Nanotechs, new mobile techs, Steel, Chemicals, Aerospace, etc..) and of FP6/FP7. Consortia or partners in consortia

ETP Seminar Brussels 16/12/05 4 Lending Schemes (I) EIB (N, S, G) State- guaranteed? Agencies & HEROS rating Large Corporates Financial Intermediary Midcaps or SMEs N: normal loan S: sff or rsff loan (FP7) GL: Global loan Gu: Guarantee Yes No GL+Gu N/S N,S N

ETP Seminar Brussels 16/12/05 5 Lending schemes (II) SPV HEROs Agencies SMEs Corporates EIB (S/N) Other Loans Grants Quasi-equity N: normal loan S: sff loan (including rsff)

ETP Seminar Brussels 16/12/05 6 Prerequisites about borrower Have: An eligible project, (within EIBs objectives), A legal structure with borrowing capacity, An activity plan, detailed over first years, more general later, Identified sources for loan repayment. Under 25 M, through Intermediary. (the Bank lends normally up to 50% of a projects cost)

ETP Seminar Brussels 16/12/05 7 Project Appraisal by EIB The base of EIB lending operations is the project Multidisciplinary teams –Ops: contact + coordination + financial aspects –PJ: technico-economic aspects (incl. Environment) And later: –Risk Management –Legal Department Monitoring Post-evaluation

ETP Seminar Brussels 16/12/05 8 Specific RDI project appraisal issues RDI Project selection criteria and procedures RDI project definition and boundaries Investment cost (facilities + activities) Environmental (and social) aspects Long-term sustainability Cost-benefit analysis( in research normally no profitability, valuation of intangibles created is delicate) how is success measured Structure issues (legal entity & borrowing capacity, consortia-specific issues) LT vision, management of operations Organise EIB project monitoring (follow-up and success) Repayment capacity, adequate security IPR issues, Intangibles management Confidentiality ensured

ETP Seminar Brussels 16/12/05 9 But to avoid getting astray : Contact us as early as possible ! Thank you for your attention!

Appendices

ETP Seminar Brussels 16/12/05 11 Examples from ESFRIs List (2005) Loans extended: Triestes Free Electron Laser, CERNs LHC (Complementary bridging finance) EMBL facilities (with COM and EIF) Tentative examples from ESFRIs List of Opportunities (2005): Fine Analysis of Matter (DESY, ESS, …) Facilities for researching Nanoelectronics (PRINS, …) High Power Computing (HPCEUR, …) Radioastronomy Medical Imaging, Etc…

ETP Seminar Brussels 16/12/05 12 Typical RDI project Proponents / Partners Corporates –Large, medium or SME –Research operator –Equipment supplier Higher Education and Research Organisations (HEROs) –Research organisations –Universities Specialized intermediaries Eur, Natl or Regl Agencies, Support Systems and budgetary authorities (financing or co-financing) including Commission and Eureka (co-financing), Also as Networks or multitype consortia.

ETP Seminar Brussels 16/12/05 13 Benefits of an EIB involvement For budgetary authorities (project sponsors) –Spreading outlays over several years, allowing to tackle conflicting priorities all together. –Research efficiency, given commitment to optimal use based on an activity plan extending over long period. For project operators –Security regarding timely availability of funds. Efficiency