Slovenian Presidency ESFRI Conference RSFF New Financing Facility for Reseach Infrastructures

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Slovenian Presidency / ESFRI ConferenceRSFF
/ New Financing Facility for Reseach
Infrastructures
Thomas C. Barrett
Brdo, 6th March 2008
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Table of Contents
RSFF Implementation Strategy and Results in 2007
1.
New Financing Alternatives for Research
Infrastructures
2.
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New financing solutions
Principles and Rationale of RSFF
RSFF provisioning capital allocation
FP7
EUR 1bn
EUR 1bn
OWN RESOURCES
Eligibility
Beneficiaries

• Large Corporates, Mid-caps, SMEs, Research
  infrastructure companies, SPVs, Universities, PPPs

• Research, Development, Innovation
• Collaboration and Capacities

Size of Loans
EIB Products

• Loans and guarantees, project finance
• Risk sharing bank facilities, funds

• Reduced to min. EUR 7.5m for direct
  loans/guarantees

EUR 10bn in Financing Capacity
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RSFF implementation strategy
Strategic 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
• Priority of European Technology Platforms, Joint
  Technology Initiatives and Eureka
• Support European Research Infrastructures / ESFRI

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RSFF implementation strategy
Sector focus
Rationale for focus
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Engineering/Automotive

• EU Policy Dimension
• Sector strategy (ETP/SRA)
• Strong RDI potential
• EIB Track Record

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Energy
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ICT
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Life Science
Sector list not limitative!
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RDI Infrastructures
Product Development
Sector Know-How
Long Term Financing
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RSFF implementation strategy
Eligible project cost

• Project capital expenditures in tangible assets.
• Intangible assets
• Research staff cost
• Incremental working capital requirements
• Acquisition of Intellectual Property Rights

Multi-annual RD budgets (typically 3-4
years)Financing up to 50 of total cost
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RSFF implementation strategy
Beneficiaries 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
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RSFF implementation strategy
Risk categories

• 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 Risk Coverage Range

• 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.

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RSFF implementation strategy
RSFF products

• Corporate Loans (senior / junior)
• Guarantees
• Project Finance (limited/non recourse)
• Mezzanine Loans
• Risk Sharing Facilities with banks
• Other structured products

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RSFF implementation strategy
Financing terms

• Medium and long term financing
• Minimum size per loan gt EUR 7.5m (for smaller
  loans EIB makes available Risk Sharing Bank
  Facilities to financial intermediaries/banks)
• Project assessment eligibility, techno-economic
  and financial viability

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RSFF update
Objectives for 2007 achieved
Geographical and sector split of RSFF financing
operations authorized by the EIB
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RSFF / New Financing Facility for Research
Infrastructures
2.
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Financing RI projects a challenge
Multiple complexities with a variable geometry
Economic issues
Technical issues
Financial issues
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Financing RI projects a challenge
Multiple complexities
Main issues

• Sizeable investment amount
• Extended planning and construction period
• Specialized, dedicated equipment
• Scientific and Technological challenges
• Organisation issues

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Financing RI projects a challenge
Multiple intricacies
Economic issues

• High political visibility
• Significant economic impact in host country
• Long operating period
• Open access
• Scope for additional revenue sources?

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Financing RI projects a challenge
Multiple complexities
Financial issues

• Dependence on public funding
• Synchronizing project cost and budget cycles
• Multi-national sponsorship
• Multitude of parties involved during
  implementation and operation
• How to meet the financing gaps

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Established EIB products
Research Infrastructure projects financed
Large Hadron Collider CERN, Geneva
Free Electron Laser Trieste
Laboratory infrastructure of EMBL Heidelberg
Nano-technology RD centre of IMEC Leuven
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Established EIB products Financing of science
park projects

• Eight projects 1.7 bn EUR investments, close to
  800 M EUR loans
• Individual loan size mostly 30-100 M EUR
• Loan Term mostly 12-20 years
• Loan structure bank intermediated or guaranteed
• Operation scope
• Modernisation and extension of existing science
  parks Helsinki Science Park (Finland, 2003),
  Finnish Science Parks (2003), San Raffaele
  (Italy, 2005), Goteborg (2005), Technopoles
  Tunisie (Tunisia, 2005)
• Construction Heidelberg Bioscience
  Infrastructure (Germany, 2001),
• Turku Biotechnology (Finland, 2002), Phoenix
  West Dortmund (2004)

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Established EIB products
Financing models
Loan financing and guarantees

• Financing public budgets / public risk
• Bridge financing of public resources / public or
  private risk
• Project Finance (3rd party revenues) / private
  risk

Beneficiaries

• Governments, public bodies
• Universities, National Research Centres
• European Economic Interest Groups (EEIGs)
• Special Purpose Vehicles (SPVs)

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Established EIB Products
Bridge Financing
Annual Budget vs. Actual Costs
Peak Requirements/ Budget Programme
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Established EIB Products
Bridge Financing (contd.)
Product Bridge Financing Facility to meet peak
financing requirements of project promoter

• Profile
• EIB financing up to 50 of total project cost
• Minimum loan amount of EUR 7.5m
• Repayment over the long term (5-30 yrs)

• Key Advantages
• Meet peak and bridge financing requirements
• Provide contingency cover of cost overruns
• Finance eligible operating cost as well as
  associated infrastructure

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RSFF A New Financing Alternative Risk Sharing
Increasing value added
EIB financing of RI with full techno-economic
and financial due diligence
Value Added
Risk Sharing
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ERCF A New Financing Alternative
ESFRI RSFF Capital Facility

• Scope
• Finance the gap in commitments required for
  individual projects
• including associated facilities and capital
  expenditure amounts
• ERCF and public budgets can be used to
  co-finance the same project

• Reimbursement Profile
• EIB finance to be repaid under specific
  arrangements to be agreed
• on a project by project basis with contributions
  from new or
• existing partners and/or associated revenue
  streams or other sources
• No Member State guarantees required

• Key Advantages
• Accelerate project implementation
• Risk Sharing on financing

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Alternative Financing Solutions
ERCF as a complementary financing instrument
Public Sector Tranche Facility to finance peak
bridge financing requirements faced by
committed partnercountries

• The repayment of the public sector tranche is
  made through budgetary commitments of partner
  countries over the long term (5-30 yrs)
• Key Advantages 1. Meet peak bridge financing
  requirements2. Provide contingency cover for
  cost overruns 3. Can finance eligible
  operating costs associated infrastructure

ERCF The ESFRI RSFF Capital Facility
Project Specific Tranche Finance individual
projects including associated facilities With
limited recourse to committed partner countries
Public Sector Tranche
Total Costs
Project Tranche
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Alternative Financing Solutions
ERCF Key Terms Conditions

• Maximum loan amount (both tranches) up to 50 of
  eligible project cost
• Minimum loan amount for direct EIB financing EUR
  7.5m
• Loan tenors in line with economic life of
  project, for ESFRI projects typically between
  5-30 yrs
• Public Sector Tranche repayment underpinned by
  long term commitments from participating
  countries/institutions
• Project Tranche Letter of comfort from borrower
  and potential shareholders to undertake best
  efforts to close the commitment gap Additional
  security on the project company might be required
  (e.g. charges on 3rd party revenues charges on
  land/assets allocation of research time
  assignment of rights to receive grants from
  public authorities)

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Thank You !
Contacts Thomas C. Barrett Tel [phone]
87006 barrett_at_eib.org Constantin
Christofidis Tel [phone] christof_at_eib.org
Kim Kreilgaard Tel [phone]
87313 kreilgaard_at_eib.org Heinz Olbers Tel 352
4379 87464 olbers_at_eib.org Gunnar Muent Tel 352
4379 88618 muent_at_eib.org
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