Post on 23-Jan-2016
description
1
RISK SHARING FINANCE FACILITY Growing Galileo 2009
Brussels 28 January 2009
EC – DG RTD – Directorate B – Anna Krzyzanowska
2
Table of Contents
2.
3.
Implementation strategy
Implementation results
1. Introduction to RSFF
4. Awareness raising
5. SMEs/Mid Cap product development
3
• December 2005 European Council:
“The European Council invites the Commission in cooperation with the European Investment Bank (EIB) to examine the possibility of strengthening their support for Research and Development by up to a maximum of EUR 10 billion through a financing facility with risk‑sharing components to foster additional investment in European research and development, particularly by the private sector.”
A political request to increase financial support to R&D
4
Risk-Sharing Finance Facility (RSFF):
The investment and financing gap• Despite increased FP 7 budget for 2007 – 2013 (EUR 54,6 billion), there is a lack of funding for excellent and top quality R&D projects at EU level
• Investment in R&D is crucial for Europe’s competitiveness and growth potential
• Lack of private investment in R&D has been identified as the single key factor for Europe’s relatively weak total investment in R & D
• R&D investment carries a high(er) risk and uncertainty; scarce financing resources in Europe for such risky projects (market deficiency)
5
Risk-Sharing Finance Facility Added value
An innovative financing mechanism to:• Foster increased private investment in research by improving
access to loan finance.• Risk-sharing between the Community and EIB to allow:
- Larger volume of risky lending to R&D
- Financing of riskier, but creditworthy projects• Generate a leverage effect so that the volume of extra lending
by EIB and its partner banks is a 4 to 6 multiple of the Community funds provided to the facility.
• Rely on an existing EIB facility (SFF), and therefore benefit from EIB’ s experience and management.
6
Table of Contents
2.
3.
Implementation strategy
Implementation results
1. Introduction to RSFF
4. Awareness raising
5. SMEs/Mid Cap product development
7
RSFF implementation strategyRisk categories
RSFF Risk Coverage Range
Moody's S&P and Fitch… …A1 A+A2 AA3 A-
Baa1 BBB+Baa2 BBBBaa3 BBB-Ba1 BB+Ba2 BBBa3 BB-B1 B+B2 BB3 B-
•RSFF is a debt based instrument not a grant
•Financing does not involve a subsidy element
•The facility does not concern risk capital such as venture capital
RSFF concerns companies or projects mature enough to demonstrate capacity to repay and service debt on the basis of a credible business plan.An external rating is not required.
8
RSFF implementation strategyStrategic objectives
Support the financing of innovative companies of any size and ownership for the implementation of eligible RDI projects
Provide value added by sharing risks with promoters, banks and other financiers for the financing of eligible projects
Offer RSFF access to small and medium sized projects and companies in all MS and AC
Priority of European Technology Platforms, Joint Technology Initiatives and Eureka
Support European Research Infrastructures (Capacities SP)
9
RSFF implementation strategyEligible project cost
Project capital expenditures in tangible assets.
Intangible assets:
Research staff cost
Incremental working capital requirements
Acquisition of Intellectual Property Rights
Multi-annual R&D budgets (typically 3-4 years)Financing up to 50% of total cost, except particular cases in line with EIB strategic orientations (ie: environment, renewable
energies; …)
10
RSFF implementation strategyBeneficiaries of RSFF financing
Mid-Caps and large corporates (typically unrated / sub investment grade / turnaround situations)
SMEs
Research Institutes
Universities
Special Purpose / Project Companies
Research Infrastructure promoters
Any size and ownership
11
RSFF implementation strategyRSFF products
Corporate Loans (senior / junior)
Guarantees
Project Finance (limited/non recourse)
Mezzanine Loans
Risk Sharing Facilities with banks
Other structured products
12
RSFF implementation strategyFinancing terms
Medium and long term financing
Minimum size per loan: > EUR 7.5m (for smaller loans EIB makes available Risk Sharing Bank Facilities
Project assessment : eligibility, techno-economic and financial viability
13
Indirect loans / guarantees
Commercial bank
Beneficiary (promoter)
Refinancing/Guarantee
Loan
Direct loans / guarantees
Comm. bank(Co-finance)
Borrower (promoter)
Loan or Guarantee
RSFF implementation strategy Financing modes – individual financing
Loan
Guarantee
14
Risk Sharing Bank FacilitySmall and medium sized projects
Partner bank
Beneficiary
Loan / Guarantee
(Mezzanine) Loans
Beneficiary Beneficiary Beneficiary
RSFF implementation strategyFinancing modes – Risk Sharing Bank Facilities
15
Table of Contents
2.
3.
Implementation strategy
Implementation results
1. Introduction to RSFF
4. Awareness raising
5. SMEs/Mid Cap product development
16
RSFF updateSummary
Volumes: RSFF operations forecast for signature at the end of 2008 is EUR 1.3 billion.
Main sectors financed: renewable energy technologies, engineering and automotive, life science and ICT plus risk-sharing with intermediaries
Geographical spread: 14 countries at the end of 2008
Financing modes: corporate loans, project finance and risk sharing bank facilities
Extensive awareness raising
17
RSFF market update 2008
The current market sentiment:
(i) significant increases in credit spreads,
(ii) sharp decline in commercial bank financing supply due to funding as well as capital constraints of banks in the market and
(iii) decreasing RDI investments due to expected economic down-turn.
The implications for RSFF are both positive (more projects) and negative (high mortality rate)
Market/business risk profiles increased significantly hence an increase in credit risk for new transactions but also for existing RSFF loan exposures.
Execution time for new operations is expected to increase and sophisticated financial structuring to mitigate operational risks more and more important
18
Geographical Spread
Austria
Bulgaria
Germany
Italy
Spain
Sw eden
Turkey
Hungary
Luxembourg
Italy
France
Israel
Germany
Netherlands
Spain
Sw edenTurkey
United Kingdom Denmark
BulgariaAustria
July 2008 End 2008
19
RSFF updateSectors
End 2008
“Bank Risk Sharing” represents loans provided by the EIB to intermediaries with a view to finance smaller loans (below EUR 7.5 million) to research-intensive companies.
20
Table of Contents
2.
3.
Implementation strategy
Implementation results
1. Introduction to RSFF
4. Awareness raising
5. SMEs/Mid Cap product development
21
RSFF updateAwareness raising campaign and dissemination (EIB + EC)
Over 40 seminars, workshops and meetings, and 17 conferences organised with the stakeholders of FP7 and with potential RSFF borrowers in 2008
In 2008 (to date), the RSFF presentations were made in: Belgium, Czech Republic, Denmark, Estonia, France, Finland, Germany, Hungary, Italy, Lithuania, Luxemburg, the Netherlands, Poland, Portugal, Slovenia, Spain, Sweden, Turkey, UK.
The website www.eib.org/rsff is being frequently updated. Portfolio updates and factsheets presenting example transactions will also be posted there.
EC RSFF sector continues to present RSFF to colleagues from DG RTD and other DGs of the research family, either in the form of dedicated presentations or within the framework of FP7 training sessions. The network of RSFF liaison officers is regularly updated on RSFF progress.
22
Table of Contents
2.
3.
Implementation strategy
Implementation results
1. Introduction to RSFF
4. Awareness raising
5. SMEs/Mid Cap product development
23
SMEs: Complementarities between CIP and FP7 (RSFF)
Risk Capital1 CIP Resources (SME)2 RSFF (SME / MidCap)3
Entrepreneur, friends, family
Business Angels
Seed/Early Stage VC Funds
Formal VC Funds
Bank Loans and Guarantees
Seed / Start-Up Phase Emerging Growth Phase Development Phase
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
Facility: CIP Guarantee schemes
Purpose: Growth financing for SMEs
Target Group: Formal VC Funds, CLOs
EIF Product: SME guarantees (loans, microcredit, equity/mezzanine, securitisation
Facility: RSFF
Purpose: RDI financing
Target Group: SMEs/MidCaps, Banks, PE Investors,
EIB Product: Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks (Investors)
24
EIB
BorrowerEIB
For loans of EUR 7.5 million or more - direct involvement by the EIB
BorrowerIntermediary
For all loans where borrowers wish to work with their own banks, in particular those of less than EUR 7.5 million - sharing of RSFF benefitswith intermediaries (e.g. through partial guarantees)
Refinancing/ Guarantee
EIB and its partner banks (intermediaries)
25
SMEs/Mid Cap – Facility StructureApproved
Signature of the Automotive Supplier RDI Facility (loans and guarantees to RDI projects of SMEs and mid cap automotive suppliers in Germany; EUR 100m + EUR 50m) - RSFF
Approval of KfW Ipex Risk Sharing Facility (loans and guarantees to mid-cap companies in Germany; EUR 100m + EUR 50m) - RSFF
Approval of RZB Group Risk Sharing Facility (loans and guarantees to mid cap companies in Austria, Hungary, Romania; EUR 100m + EUR 70m) – partially RSFF
Approval of CS Risk Sharing Energy Efficiency (loans and guarantees to SMEs in the Czek Republic; EUR 100m + EUR 60m) – SMEs, non RSFF
26
SMEs/Mid Cap – Facility Structure
Running negotiations
Project Name Target Amount (M EUR)
Bank Pekao BP SME 100
BPI SME Risk Sharing SFF SME 100
BA-CA Risk Sharing Austria RSFF SME/Midcap 75
Banca Intesa SME 100
SEB SME 100
27
RSFF
Thank you for your attention