Transcript Slide 1

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
Outline
Introduction of EIB
The ECTF
The Impact of the Crisis on the Semiconductor Industry
The RSFF
28.04.2010
European Investment Bank
2
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 232.4 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
28.04.2010
European Investment Bank
3
EIB Lending to the Automotive Sector
EIB lending to the automotive sector
9
8.2 bn
6
3
0
EUR bn
1.7 bn
1.5 bn
2007
2008
2009
Dec 2008 – Dec 2009
Loans approved: EUR 8.7 bn, of which:
1.
ECTF: EUR 4.8 bn
2.
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
28.04.2010
European Investment Bank
4
4
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
28.04.2010
European Investment Bank
5
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
 ICT has a key role!
28.04.2010
European Investment Bank
6
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.)
28.04.2010
European Investment Bank
7
EIB Lending to ICT Sector
EUR 3.0 bn in 2008
Economic
Development
15%
Semiconductors
15%
Satellite
7%
R&D
14%
3G
13%
Fixed broadband
36%
28.04.2010
European Investment Bank
8
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
28.04.2010
European Investment Bank
9
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)
28.04.2010
European Investment Bank
10
EIB and EIF financing tools
1
Risk Capital
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-ofFunds
2
CIP Resources (SME)
CIP Guarantee schemes
Growth financing for SMEs
Formal VC Funds
SME guarantees (loans,
microcredit,
equity/mezzanine,
securitisation
3 RSFF (SME / MidCap) 4 Investment Loans
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
Seed / Start-Up Phase
28.04.2010
Emerging Growth Phase
Development Phase
European Investment Bank
Later Stage
Counterparts
11
EIB Financing Solutions
Typical EIB financing modes
Direct Loan
EIB
Commercial
Bank(s)
Loan
Loan
Bank Guaranteed Loan
Bank Intermediated Loans
EIB
EIB
Loan
Guarantee
Commercial
Bank(s)
Loan
Commercial
Bank(s)
Loan(s) (< 12.5m)
Customer
28.04.2010
Customer
European Investment Bank
Customer
12
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
28.04.2010
European Investment Bank
13
Risk Sharing Finance Facility – Set-up
EUR 1 bn
Own Resources
RSFF
[up to EUR 10 bn assuming
leverage of 5.0x ]
Direct Lending
1
Corporate Lending
Senior Secured
Second Lien
Senior Unsecured
Junior Unsecured
PIK loans
Mezzanine, etc.
Project Financing
Universities
Other: SPVs, PPPs, JTIs…
28.04.2010
EUR 1 bn
European
Commission
Indirect Lending / Financing
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
14
The EIB Project Approach
What can be financed? An example
Eligible project cost includes:
ELIGIBLE COSTS
Time
Year 1
€ 20 m
Year 2
€ 10 m
Year 3
€ 30 m
Total
€ 60 m
€ 30 m
28.04.2010
• Facilities: project
tangible assets
capital
expenditures
for
• Activities: project capital expenditures for
intangible assets, research staff cost,
incremental working capital needs and other
related operating expenses
R&D budgets typically cumulated over 3 years
(investment programme)
MAX. EIB LOAN
Generally up to 50% (exceptionally up to 75%) of
the total project cost
European Investment Bank
15
Summary
ECTF for low emission technology & safety
Financing of ICT fits into EIB´s policy
RSFF for financing of sub-investment grade RDI projects
28.04.2010
European Investment Bank
16
Andres Gavira Etzel
Senior Engineer
ICT & e-Economy Division
Phone: (+352) 4379 82634
email: [email protected]
European Investment Bank
100, boulevard Konrad Adenauer
L-2950 Luxembourg
28.04.2010
European Investment Bank
17