1. European Investment Bank
EIB Participation at the International experts workshop: “Assessing the economic competitiveness of the European Automotive Embedded Software industry” Andres Gavira Etzel
Brussels 28th April 2010
European Investment Bank

2. European Investment Bank
Outline
Introduction of EIB
The ECTF
The Impact of the Crisis on the Semiconductor Industry
The RSFF
European Investment Bank 2

3. European Investment Bank Profile
The European Investment Bank is the European Union‘s long-term financing institution. The Bank acts as an autonomous body set up to finance capital investments furthering European integration by promoting EU policies.
EIB was created by the Treaty of Rome in 1958
EIB is a not-for-profit, policy driven institution
EIB is 100% owned by the 27 EU member states
EIB has subscribed capital of EUR bn as of 2009
EIB is AAA rated
EIB funds itself on the capital markets: EUR 79.4 bn in 2009
EIB signed loans amounting to EUR 79.1 bn in 2009
EIB is the largest multilateral financing institution
European Investment Bank

4. European Investment Bank
EIB Lending to the Automotive Sector
Dec 2008 – Dec 2009
Loans approved: EUR 8.7 bn, of which:
ECTF: EUR 4.8 bn
OEMs: 84%; suppliers: 16%
Size of supported investment programmes: EUR 28 bn
EIB has become the largest R&D financier of the European automotive sector
European Investment Bank

5. The ECTF programme – scope & objectives
EIB’s “European Clean Transport Facility” (ECTF)
Objective: “...support investments targeting (Green Cars):
Research, Development and Innovation;
emissions reduction; and
energy efficiency.”
Beneficiaries: OEMs & suppliers in the main transport sectors:
Automotive
Aircraft
Rail
Maritime
Lending volume: EUR 8 bn in 2009/2010
European Investment Bank

6. European Investment Bank
ECTF Outlook ...
The link to ICT
EIB lending to the sector will continue in 2010
Risk appetite of commercial banking sector remains limited
Bond market offers easier access for the better rated companies, others (if any) may only place high-yield bonds
Strict focus on:
R&D for low emission technology & safety
 ICT has a key role!
Facilities for small car platforms in convergence areas
Development activities of automotive suppliers
European Investment Bank

7. European Investment Bank
ICT Policy Context
Semiconductors are the basis for ICT. ICT elegibility comes through the Knowledge Economy objective. Investment concerns:
R&D
Innovative production facilities
Adoption of innovative products/processes
EIB is technology / product neutral. Investments cover the complete semiconductor eco-system (IDM’s, equipment suppliers, research institutes, etc.)
European Investment Bank

8. EIB Lending to ICT Sector
EUR 3.0 bn in 2008
European Investment Bank

9. What is different with this crisis?
Crisis has had an unprecedented, deep impact on semiconductor sector
Will lead to an international redistribution of production
Europe will have to react to this swiftly
Green shoots are emerging, opportunities are out there:
Investment needs for broadband, green technologies, to assist demographic change
Europe has long R&D traditions and favourable political environment
European Investment Bank

10. Sources for funding of investments
Cash flow (adversely affected by current market environment)
Equity (expensive in current environment)
Debt (difficult due to de-leveraging efforts)
Subsidies (competition with other more visible sectors)
European Investment Bank

11. EIB and EIF financing tools1
Risk Capital 2
CIP Resources (SME) 3
RSFF (SME / MidCap)
Investment Loans 4
Facility: High Growth Innovative SME Scheme (GIF), Ecotech
Purpose: IP financing, technology transfer, seed financing, investment readiness
Target Group: VC Funds, Business Angels
EIF Product: Fund-of-Funds
CIP Guarantee schemes
Growth financing for SMEs
Formal VC Funds
SME guarantees (loans, microcredit, equity/mezzanine, securitisation
RSFF
RDI financing
SMEs/MidCaps, Banks, PE Investors (sub-investment grade)
Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks (Investors)
Investment Loans
RDI financing
MidCaps/ Large Corporates/ Public Sector Entities (investment grade)
Loans, Guarantees
Bank Loans and Guarantees
Formal VC Funds
Seed/Early Stage VC Funds
Business Angels
Entrepreneur, friends, family
Later Stage
Counterparts
Seed / Start-Up Phase
Emerging Growth Phase
Development Phase
European Investment Bank

12. EIB Financing Solutions Typical EIB financing modes
Direct Loan
Commercial
Bank(s)
Customer
EIB
Loan
Bank Guaranteed Loan
Bank Intermediated Loans
EIB
Commercial
Bank(s)
Customer
Loan
Loan(s) (< 12.5m)
EIB
Loan
Guarantee
Commercial
Bank(s)
The typical EIB financing solutions comprise:
Direct Loans: where financing is provided directly to the customer alongside other lenders as appropriate. Credit risk is shared on an equal basis with other bank(s).
Such investment loans are limited to 50% of the investment cost, as defined by the Bank, in order to leave room for other banks.
Depending on the financial standing of the counterpart, the Bank will sometimes require guarantee.
Bank Guaranteed Loans: where financing is provided directly to the customer alongside other lenders as appropriate. Credit risk is born by the guarantor.
Bank Intermediated Loans: where financing is provided to the customer ’s house bank(s) passing through the Bank’s low funding cost. Credit risk is born by the intermediary bank.
Due to capacity constraints of the Bank, such direct and guaranteed loans are possible for investments from € 25 mn and above. To cater for smaller loans, notably for lending to SMEs the Bank has developed so called global loans – lines of credit to local/intermediary banks, which channel/on-lend funds to the final customers.
Mid-cap loans
Customer
European Investment Bank

13. European Investment Bank
EIB Loans
Long Term Tenor
Attractive Pricing
EIB does not sell assets on the secondary market (buy and hold strategy)
Signalling Effect: EIB as a quality stamp
Minimal loan size EUR 12.5 million (= minimal project size of EUR 25 million)
Traditionally, investment grade projects
European Investment Bank 13

14. Risk Sharing Finance Facility – Set-up
RSFF
[up to EUR 10 bn assuming
leverage of 5.0x ]
EUR 1 bn
European
Commission
EUR 1 bn
Own Resources
Direct Lending
Indirect Lending / Financing 1
Corporate Lending
Senior Secured
Second Lien
Senior Unsecured
Junior Unsecured
PIK loans
Mezzanine, etc.
Project Financing
Universities
Other: SPVs, PPPs, JTIs… 2
Financial Intermediaries
(extend lending capacity)
Risk Sharing
Co-financing 3
Investment Funds
Renewable Energy
Others 4
Collaboration with EIF
Banks
Funds
European Investment Bank

15. The EIB Project Approach
What can be financed? An example
ELIGIBLE COSTS
Eligible project cost includes:
Facilities: project capital expenditures for tangible assets
Activities: project capital expenditures for intangible assets, research staff cost, incremental working capital needs and other related operating expenses
Year 1
€ 20 m
Year 2
€ 10 m
Time
Year 3
€ 30 m
Total
€ 60 m
R&D budgets typically cumulated over 3 years (investment programme)
€ 30 m
MAX. EIB LOAN
Generally up to 50% (exceptionally up to 75%) of the total project cost
European Investment Bank

16. European Investment Bank
Summary
ECTF for low emission technology & safety
Financing of ICT fits into EIB´s policy
RSFF for financing of sub-investment grade RDI projects
European Investment Bank 16

17. European Investment Bank
Andres Gavira Etzel
Senior Engineer
ICT & e-Economy Division
Phone: (+352)
European Investment Bank
100, boulevard Konrad Adenauer
L-2950 Luxembourg
European Investment Bank