EIB IN THE WATER SECTOR Thomas van Gilst EIB IN THE WATER SECTOR Thomas van Gilst EWA Brussels 7...
Transcript of EIB IN THE WATER SECTOR Thomas van Gilst EIB IN THE WATER SECTOR Thomas van Gilst EWA Brussels 7...
European Investment Bank 107/11/2017
European Investment Bank
EIB IN THE WATER SECTOR
Thomas van Gilst
EWA Brussels
7 November 2017
European Investment Bank 207/11/2017
1. The EIB: the EU Bank
• Natural financing partner for the EU institutions since 1958 – A policy driven Bank
• Headquartered in Luxembourg with 40 local offices
• Largest multilateral lender and borrower in the World (AAA)
• Around 3000 staff includingfinance professionals, engineers, sector economistsand socio-environmentalexperts
• Around 90% of lending isinside the EU
Investing in Europe’s growth
European Investment Bank 407/11/2017
EIB priorities:
SMEsInfrastructureEnvironment Innovation
EUR
16.9bn
EUR
19.7bn
EUR
13.5bn
EUR
33.6bn
European Investment Bank 507/11/2017
11/15/20175
The EIB: a major lender to the water sector
• The largest source of loan financing to the global water sector
• Can lend up to 50% of investment costs for individual projects (average = 30)
• Lends to public or private utility companies, national or local authorities
• Lending covers the whole water cycle (water resources, water supply, sanitation, flood protection) – projects mainly water supply and sanitation
European Investment Bank 607/11/201711/15/2017
0,0
1.000,0
2.000,0
3.000,0
4.000,0
5.000,0
6.000,0
2012 2013 2014 2015 2016
Central Asia
Latin America
Candidate countries
Asia (excl. Central Asia)
ACP States
Russia, E.Europe,Sth.CaucasusMediterraneancountriesMember states
Total loan volume: EUR 19.85Bn
Loan signatures in the water sector in 2012-2016 by region (EUR m)
European Investment Bank 707/11/2017
EU member states – Lending tothe water sector in 2012-2016 (EUR m)
189262
300
400
458
645
1.015
1.330
1.500
1.562
2.820
5.438
Sweden
Poland
Portugal
Slovenia
Finland
Greece
Bulgaria
Austria
Cyprus
Romania
Ireland
Hungary
Netherlands
Spain
France
Belgium
Germany
Italy
United Kingdom
• 33% in UK
• > 75% in five countries
European Investment Bank 807/11/2017
NON-EU regions – Lending to the water sector in 2012-2016 (EUR m)
20
118
199
341
645
535
449
Central Asia
Asia (excl. Central Asia)
Latin America
Candidate countries
Mediterranean countries
ACP States
Russia, E.Europe, Sth.Caucasus
European Investment Bank 907/11/2017
European Investment Bank
EIB project cycle
15/11/2017European Investment Bank Group 9
We support sound and sustainable projects
EIBprojectcycle
Step 1 ProposalStep 2 Appraisal
Step 3 Approval
Step 4Signature
Step 5Disbursement
Step 7 Repayment
• Technical assessment
• Environmental• Social• Financial• Economic
Finance contract is signed
• EIB Management Committee
• Investment Committee(for operations potentially benefiting from an EU guarantee under EFSI)
• EIB Board of Directors
European Investment Bank 1007/11/2017
Project example: BLOMINMÄKI Wastewater Treatment Plant
• ESPOO,• KAUNIAINEN• KIRKKONUMMI• SIUNTIO• WESTERN VANTAA
Scope• New wastewater treatment plant in the bedrock• Wastewater conveyance tunnels and water
pipelines• Closure of the ageing Suomenoja plant
Project objectives:• Provide capacity (550,000 population
equivalent) to treat western Helsinki’s wastewater to very high standards (i.e. including nutrient removal)
• COP objective: Environment and Climate Action
Funding sources Euro million
EIB loan 200
Other sources 203
Total project cost 403
European Investment Bank 1107/11/2017
Minimize impacts on landscape and population
E18 Helsinki – Turku MotorwayHelsinki – Turku Motorway E18
European Investment Bank 1207/11/2017
1. Inlet basin
2. Fine screens
3. Grit removal
4. Primary sedimentaion
5. Aeration basins
6. Final sedimentation
7. Biological filters
8. Sludge thickening
9. Digesters
10. Reject water treatment
11. Outlet air chimney
12. Office building
13. Storage/work room
14. Exit shafts
15. Sludge and biogas
treatment
16. Sludge storage silos
17. Disk filters, 10-20 µm
17
Only visible components
State of the art underground solutionwith innovative technologies
European Investment Bank 1307/11/2017
Key Drivers for EIB Financed Water Projects inside EU
Service Delivery/continuity
• Network extension
• Assets renewal
• Climate Change (adaptation)
• Service rationalization
• Post disaster emergency
Compliance:
• Urban Wastewater Treatment Directive
• Water Treatment Directive
• Water Framework Directive
• Floods Directive
• Local regulations
Micropollutants ?
European Investment Bank 1407/11/2017
Today 2030
Evolving international context Water security: a risk for economic growth in the EU
European Investment Bank 1507/11/2017
How can EIB lending evolve to strengthen water security and economic growth?
– increase focus on smaller utilities (the most at risk) through EFSI loans and advisory.
– Increasing focus on water for industries.
– Increasing support to innovation in the water sector.
European Investment Bank 1607/11/2017
Example of targeting smaller Utilities: Viveracqua Hydrobond
Credit Risk - highlights
• Local municipality-owned companies, providing regulated water services under concession agreements
• Internal ratings ranging from 4/Baa2 to 6+/B1 (4/Baa2: 1 case; 4-/Baa3: 2 cases; 5+/Ba1: 5 cases; 6+/B1: 1 case)
• EIB underlying documentation to include typical corporate clauses for operations with Italian water companies
HYDRO SPV 130/99
Issuer 1
Issuer 2
……….
Issuer 9
Issuance of Bonds
Subscription price
Remuneration and repayment of Bonds
Issuance of Notes
Subscription price
Interest and principal on the Notes
Liquidity and credit support on the Notes
EIB +
Investors
Cash reserve (20%) Veneto
Sviluppo
Liquidity and credit support on the Notes
European Investment Bank 1707/11/2017
European Investment Bank
European Fund for StrategicInvestments (EFSI)
Financing: EUR 61bn
EU Guarantee EUR 16bn EIB EUR 5bn
Infrastructure and Innovation Window
EUR 15.5bn
SME Window
EUR 5.5bn
Deployed by EIF
Final investments: EUR 315bn
EFSI - European Fund for Strategic Investments EUR 21bn
Deployed by EIB
European Investment Bank 1807/11/2017
Pre- seed Stage of developmentStartup Small MidCaps
<250 employeesMidCaps
250-500Large MidCaps
500-3,000
Emerging Large Caps
Seed stage
First “Valley of Death”
Second “Valley of Death”
Access t
o f
inan
ce
Fu
nd
ing
siz
e (
EU
Rm
)
Intermediaries (Funds)
Intermediaries (Banks)
Mandates/ SLA Global Loans
Investment Loans
Contingent Loans
Qu
asi-
equ
ity
C
o-i
nve
stm
ents
/Dir
ect
Equ
ity
Tech
Tra
nsf
er /
VC
VC
/ S
ME
Fun
ds
VC
/ S
ME
Fun
ds
PE
/ M
idC
apFu
nd
s
< 1.0m
< 7.5m
< 10m
< 25m
Innovation finance gap
Growth Finance Gap – expansion capital EUR 7.5m-25m
5. EIB products for financing innovation
Market Gaps and EIB Group approach
European Investment Bank 1907/11/2017
4. Challenges of financing innovation in Water
financing innovation
The water market is
mature, with limited growth rates overall.
Regulatory constraints
The exit opportunities for investors (IPOs/M&A), are limited
Water is not a strongly
innovative sector
The water market is
fragmented
Market uptake of new
technologies is difficult
The market is undervalued
European Investment Bank 2007/11/2017
EIB support on offer
Innovation Finance Advisory
• Facilitate access to long-term funding for mid-caps/large-caps
• Review of strategy and business plan
• Review of key assumptions-sensitivities, riskallocation, develop “credit story”
• Review of eligibility for various financing options,advise on capital structure
• Support project/company to ensure that it meetsEIB/EFSI eligibility and viability and risk assessment(with support of other operational services whereneeded)
F
Promoter/ Project
definitionPre-financing
• Objective
• Shareholders / sponsorsdefinition
• Strategy
• Business plan
• Due diligence
• Negotiations
• Structuring
• Documentation
Innovation Finance Advisory intervention
Improved access to finance
Funding Appraisal
• Fees applicable to be agreed on a case by case basis, depending on the scope of work involved, and in line with the agreement with the EC
• No fees applicable on Public Sector projects
European Investment Bank 2107/11/2017
Would you like to know more?
Consult the Hub’sadvisory offer
www.eib.org/eiah
Contact the Hub for more info
Request support fromthe Hub
www.eib.org/eiah/contact
European Investment Bank 2207/11/2017
Thank you for your attention
Thomas van Gilst
Head of Water Management DivisionProjects Directorate
Phone: (+352) 437982741Fax: (+352) 4379 52741eMail: [email protected]
European Investment Bank100, boulevard Konrad AdenauerL-2950 Luxembourg
For more information
please contact:
Questions?
European Investment Bank 2307/11/2017
Impact of regulatory uncertainty on EIB lending
New method for hydric tariffsAverage increase in tariff: +2.7%compared to 2012
Ronchi Decree:liberalization of thewater sector
Referendum on theabrogation of the RonchiDecree (2009) followed bylegislative uncertainty:Italians voted YES
Testo Unico Ambientale(2006): new stringent limits forwater quality and newmanaging units (AATO) at theregional level
155
418
51
102
4
150
200
258
310
0,00
50,00
100,00
150,00
200,00
250,00
300,00
350,00
400,00
450,00
2007 2008 2009 2010 2011 2012 2013 2014 2015
EIB lending to the water sector in ITALY (excluding MOSE project), EUR M
Amount disbursed Expected