1. European Investment Bank
Supporting investment in strategic infrastructure
Peter Jacobs & Khalid Naqib Financing Welsh Infrastructure
24-25 March 2015: The Celtic Manor, Wales
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2. The European Investment Bank
Short introduction
Investment priorities, areas of engagement
The ‘Juncker Plan’
Deals with EIB involvement in the UK
Focus on Project Finance/PPP
Project Appraisal Process
Funding Structures
Market observations
PF deals with EIB involvement across Europe
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3. Short introduction to EIB
Providing finance for sound and sustainable investment projects.
Shareholders: 28 EU Member States.
Largest multilateral lender and borrower in the world.
Raises funding as an AAA issuer and passes on the advantage to borrowers
Projects in over 160 countries.
Key products:
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4. Supporting EU policy goals
EIB’s investment priorities align with the EU’s policy goals
Sustainable growth and jobs in Europe
Innovation and skills
Trans-European Networks
Sustainable, competitive and secure energy
Financing smaller businesses
Economic and social cohesion
Special support for economically weaker regions
Helping regions absorb EU funds
Environmental sustainability
Climate action
Sustainable transport
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5. Eligibility for EIB funding
Projects that EIB finances must meet some requirements:
Align with at least one of the EIB’s policy objectives
Technically sound
Financially viable
Show an acceptable economic return
Comply with environmental protection and procurement regulations
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6. The European Investment Bank
Some recent UK deals
£500m
London Crossrail
£350m
Vodafone Mobile
£1500m
National Grid
United Utilities
THFC Affordable Housing
£150m
Port of Liverpool WBS
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7. Past EIB engagement in Wales
Norgine Pharmaceuticals, Hengoed
New Swansea University campus
Welsh Water
Social housing across Wales
Ford Engine Plant, Bridgend
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8. Infrastructure (transport, health, utilities) Energy & climate action
Areas of engagement
Infrastructure (transport, health, utilities)
Energy & climate action
Skills & innovation
Social housing
Urban regeneration
SMEs
Examples of potential projects
Swansea - university, trains depot
Velindre Hospital
A465 Widening M4
Broadband rollout
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9. The European Investment Bank
The Investment Plan for Europe (IPE)
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10. The European Investment Bank
The ‘Juncker’ Plan
The Investment Plan for Europe: What`s next?
By mid
The new European Fund for Strategic Investments (‘EFSI’) is operational.
A transparent pipeline of projects is in place at EU level, which will be developed over time.
The new investment advisory hub is operational.
Follow up activities have started at EU, national and regional levels, together with relevant stakeholders.
A dedicated website allows progress on the Investment Plan to be monitored in real-time.
By mid
Progress will be reviewed, including at the level of Heads of State and Government.
Further options may be considered ahead of the mid-term review of the Multi-annual Financial Framework.
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11. The European Investment Bank
Conclusions
Cornerstone lender for infrastructure across the UK
Strong commitment to support long term investment in Wales
Support for riskier projects under the Investment Plan for Europe
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12. Focus on PF/PPP: How EIB adds value
Leading player in the Project Finance/PPP market in Western Europe
Reliable partner in good times and bad
EIB pricing improves VfM and reduces cost to taxpayers/ customers
Cornerstone investor – catalytic impact attracting co-funders
Signal of quality – long term lender
Bridging public and private: close links with HM Treasury and public authorities
Adaptable product offering
Early involvement to test bankability   
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13. Funding structures: an adaptable product offering
Traditional
long-term
senior debt
Hybrid debt + capital market
Co-funding with new debt funds
Hybrid EIB-equity limited recourse
Government / ECA guarantees
Construction financing to bond takeout
Contingent mezzanine/ bonds
Funded mezzanine
Loan Guarantees TEN Transport
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14. The European Investment Bank
When to engage EIB
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15. The European Investment Bank
Market observations
Wales
Promising developments on NPD delivery model
Pipeline of projects in development
Renewable energy projects more advanced
Across Western European markets
Strong liquidity
Competition returning
Appetite for risk
Limited number of greenfield projects
Emergence of alternative funders and/or funding structures
Draghi impact on liquidity and pricing
Investors increasingly comfortable with higher (e.g. construction) risk
Rating agencies adopting positive stance
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16. Some recent PF projects
UNITED KINGDOM London Gateway Port
€300m
FRANCE Contournement Nîmes-Montpellier
€450m
BELGIUM C-Power Offshore Wind
€260m
THE NETHERLANDS A1 / A6 Motorway
€90m
IRELAND Irish Schools Investment Programme
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17. The European Investment Bank
Thank you!
More information at: Tél. :
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18. The European Investment Bank
Reserve slides
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19. Product line: senior or subordinated
EIB project bond credit enhancement
EIB senior debt
EIB Senior debt
Banks
Bonds (PP or Public)
Bank/Bond hybrid
Equity
other
Public Bond Issue
EIB PBCE (subordinated debt)
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20. Focus on Project Finance/ PPP
How does EIB add value?
Established and experienced PPP lender
Bridging public and private
Provides both liquidity and low pricing (AAA rated)
Reliable partner in good times and bad
Attractive lending terms (size, tenor, pricing)
Signal of quality – long-term lender
Flexibility- adaptable to a variety of funding structures
Track record of delivering
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