Presentation by Els Boerhof

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Els Boerhof, Manager Micro and Small EnterpriseFund(MASSIF) - FMO - Netherlands

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Presentation by Els Boerhof

  1. 1. TBLI Europe 2007 ‘ Private Equity Approaches to Renewable Energy Infrastructure and the Environment’ Martin Poulsen Paris, 15 th November 2007
  2. 2. <ul><li>Created by the Treaty of Rome in 1958, to provide long-term finance for projects promoting European integration. </li></ul><ul><ul><li>Subscribed capital EUR 165bn. </li></ul></ul><ul><ul><li>EIB shareholders: 27 Member States of the European Union. </li></ul></ul><ul><ul><li>Lending in 2006: EUR 45.8bn (EUR 39.8bn within the EU25). </li></ul></ul><ul><ul><li>‘ Promoting European Objectives’ </li></ul></ul>EIB – The European Union’s financing institution
  3. 3. The European Investment Fund (EIF) Venture capital & SME guarantees <ul><li>Established in 1994 </li></ul><ul><li>Owned by: </li></ul><ul><ul><li>EIB </li></ul></ul><ul><ul><li>European Commission </li></ul></ul><ul><ul><li>Other European financial institutions </li></ul></ul><ul><li>Resources: </li></ul><ul><ul><li>Own funds – subscribed capital </li></ul></ul><ul><ul><li>EU programmes </li></ul></ul><ul><ul><li>Trust operations (EIB, German Government) </li></ul></ul><ul><li>2006 figures (signatures): </li></ul><ul><ul><li>Venture capital funds: EUR 368m (21 funds) </li></ul></ul><ul><ul><li>Guarantee operations: EUR 1685m (35 operations) </li></ul></ul>
  4. 4. <ul><li>Private equity backed companies create more jobs </li></ul><ul><ul><li>PE-backed companies increased employment by  9% p.a., compared to 1% p.a. for Mid-250 companies. </li></ul></ul><ul><ul><li>2.8 million people (19%) in the UK private sector work for PE backed companies. </li></ul></ul><ul><li>Private equity backed companies outperform: </li></ul><ul><ul><li>Sales growth  9% p.a. (vs 5% p.a. Mid-250 companies), export growth 6% p.a. (vs 2%) national growth rate, investment by 18% p.a. (vs 1%) national increase </li></ul></ul><ul><li>Annual tax contribution of over £26 billion. </li></ul><ul><li>Typical areas of added value: </li></ul><ul><ul><li>financial advice, guidance on strategic matters, management recruitment purposes, access to contacts and market information. </li></ul></ul>Why Private Equity in addition to Lending?
  5. 5. <ul><ul><li>Seek to encourage investment in funds addressing new or challenging areas. </li></ul></ul><ul><ul><li>Driven by financial return </li></ul></ul><ul><ul><li>Develop market capacity for new build renewable energy projects </li></ul></ul><ul><ul><li>Catalytic effect in attracting other long-term investors into the asset class </li></ul></ul><ul><ul><li>Transfer of best practice between markets </li></ul></ul>The EIB Approach: Objectives
  6. 6. The EIB Approach: Requirements <ul><li>Identifiable market demand and appropriate sizing </li></ul><ul><li>Management team experience and expertise (existing and new funds) </li></ul><ul><li>Focus on primary market transactions in eligible sectors and countries </li></ul><ul><li>Coherent investment and divestment strategy </li></ul><ul><li>Broadly balanced portfolio </li></ul><ul><li>No single controlling investor </li></ul>
  7. 7. EIB Infrastructure Fund Portfolio <ul><li>Infrastructure Fund investment activity commenced early 2005 </li></ul><ul><li>Investments in 5 infrastructure and 2 renewable energy funds: </li></ul><ul><ul><li>Emerging Europe Convergence Fund </li></ul></ul><ul><ul><li>Dexia South Europe Infrastructure Equity Finance </li></ul></ul><ul><ul><li>Dutch Infrastructure Fund </li></ul></ul><ul><ul><li>Barclays European Infrastructure Fund </li></ul></ul><ul><ul><li>Fin Opi Fondo Italia </li></ul></ul><ul><ul><li>Green Alliance </li></ul></ul><ul><ul><li>Enercap Power Fund </li></ul></ul><ul><li>Total fund volume EUR1620m, total EIB commitment EUR195m, 29% drawn down at April 2007. </li></ul><ul><li>Portfolio remains young, performance expected to be positive. </li></ul>
  8. 8. Environment Oriented Fund Concepts <ul><li>Forestry Fund </li></ul><ul><ul><li>First proposals under evaluation </li></ul></ul><ul><li>Ecosystems (Biodiversity) Fund </li></ul><ul><ul><li>Overall objective: demonstrate investments in the sector can be financially sustainable </li></ul></ul><ul><ul><li>Sectors : agriculture, forestry, non-timber forest products, fisheries and aquaculture, ecotourism. </li></ul></ul><ul><ul><li>Target of EUR50m (subject to market study findings) </li></ul></ul><ul><ul><li>European focus, enterprises and land-based assets </li></ul></ul><ul><ul><li>Associated technical assistance fund </li></ul></ul><ul><ul><li>Target 10%+ IRR </li></ul></ul>
  9. 9. Ecosystems Fund - challenges <ul><li>Market definition challenging </li></ul><ul><li>Dealflow unclear </li></ul><ul><li>Traditional fund managers do not understand market </li></ul><ul><li>Although comparable funds exist, none are European </li></ul><ul><li>Further investor support sought! </li></ul>
  10. 10. European Investment Bank http://www.eib.org 36 Thank you Martin Poulsen Energy / Environment Private Equity Specialist: [email_address] Chris Knowles Associate Director – Energy & Environment [email_address]
  11. 11. Environmental Sustainability <ul><li>Climate change initiatives, sustainable development and social welfare </li></ul><ul><li>Minimising adverse environmental impact in all projects </li></ul><ul><li>Direct loans of EUR 9.6bn in 2006 for: </li></ul><ul><ul><li>mitigating climate change </li></ul></ul><ul><ul><li>promoting waste management and sustainable use of natural resources </li></ul></ul><ul><ul><li>improving the urban environment </li></ul></ul><ul><ul><li>reducing pollution </li></ul></ul><ul><ul><li>protecting biodiversity </li></ul></ul><ul><li>Total loans of EUR 52.9bn 2002-2006 </li></ul>
  12. 12. Sustainable, Competitive and Secure Energy <ul><li>Five priority areas: </li></ul><ul><ul><li>Renewable energy </li></ul></ul><ul><ul><li>Energy efficiency </li></ul></ul><ul><ul><li>Research, development and innovation </li></ul></ul><ul><ul><li>Diversification and security of internal supply (including TEN-E) </li></ul></ul><ul><ul><li>External energy security and economic development </li></ul></ul><ul><li>Loans of EUR 3.3bn in 2006: </li></ul><ul><ul><li>EUR 0.5bn to renewable energy projects </li></ul></ul><ul><ul><li>EUR 0.3bn to TEN-E projects </li></ul></ul><ul><li>Total loans of EUR 15.3bn 2002-2006 </li></ul><ul><ul><li>EUR 2.4bn to renewable energy projects </li></ul></ul><ul><ul><li>EUR 3.1bn to TEN-E projects </li></ul></ul>

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