EIB Financing of the Water Sector:

Funding Opportunities for SMEs

during 2014 – 2020

FinnoWater and SME Financing Infoday

Brussels, 24 January 2014

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• The EU’s bank, set up in 1958 by the Treaty of Rome.

• Shareholders: 28 Member States of the European Union.

• Providing long-term financing and expertise for sound and sustainable

investment projects to implement EU policy.

• Largest multilateral lender (EUR 52.2 bn in 2012) and borrower (EUR

71 bn in 2012) in the world.

• More than 400 projects each year in over 160 countries

• Some 90% of lending is inside the EU

• Public and private clients

The EIB at a glance

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6 priority objectives:

• Economic and social cohesion

• Support for small and medium-sized enterprises (SMEs)

• Environment and sustainable communities [water sector]

• Innovation and skills [RDI]

• Development of trans-European networks (TEN-T, TEN-T, TEN-Tele)

• Sustainable, competitive and secure energy

The EIB: supporting EU policy goals

The EIB capital increase

Exceptional response

for sustainable growth & jobs

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EIB new EU growth and jobs initiatives

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Innovation and Skills

up to EUR 15bn

SME Access to Finance

up to EUR 15bn

Resource Efficiency

up to EUR 20bn

Strategic Infrastructure

up to EUR 15bn

Promote RDI,

training and

education

Maintain strong

emphasis on

Climate action

Improve

employment

opportunities

Strengthen the

internal market /

support cohesion

European Investment Bank Group

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EIB financing can cover investment in the entire water cycle.

Key aspects of EIB lending policy in the water sector:

• River basin approach (Integrated Water Resource Management)

• Sector development and consolidation

• Climate change: adaptation

• Water efficiency

• Additional supply requirements

• Wastewater and sanitation services

• Research and innovation

EIB financing of the water sector

EU-27 89.4%

Eastern Neighbours, and Russia

0.5%

ACP 1.9%

Rep of South Africa 0.9%

Candidates and

Potential Candidates

3.4%

Mediterranean Partner Countries

3.9%

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Different types of innovation needed in

different contexts :

• technological (incl. appropriate lower

cost technologies),

• managerial (efficiency)

• Institutional (regulatory) / social

• procurement

• .. and sometimes financial

Water & Waste Management projects signed

2008-2012

(total EUR 18.9 bn)

EIB direct lending in the water sector

Average EIB lending in the water sector

2008-2012 = 5% of total EIB lending

Average signatures of EUR 3.4 bn p.a.

Vast majority in traditional investment

programmes for water/wastewater

infrastructure (service provision)

Non-EU projects support varying

infrastructure types, service levels and

institutional activities – from desalination

plants to community mobilisation for

sanitation demand creation.

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EIB financing structures

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The EIB Group SME portfolio

We provide Loans, Risk-sharing/Guarantees and Equity (e.g. VC).

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EIB Loans for SMEs

Intermediated through commercial banks and institutions

Investment loans

Transfer financial advantage (e.g lower interest rate for the SME)

Eligibility:

• Capital expenditure investment – fixed assets, intangible assets

(including purchase of patents and licenses), etc.

• Sectors: widened eligibility and allocation criteria for Loans for SMEs

(most sectors eligible)

• Medium and long-term working capital investment: subject to min. 2

year commitment

• Generation change or staff-related enterprise transmission: up to EUR

5 m (from EUR 1 m previously)

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For example, the following can be supported:

• Purchases (plant, equipment, raw materials, semi-manufactures,

stock…)

• RDI expenditure

• Build-up or take-over of distribution networks within the EU

• Transmission in order to safeguard economic activity

• Working capital and liquidity ratios

EIB Loans for SMEs

• Expand joint risk-sharing financial instruments in cooperation

with EC and MS, using Structural Funds to leverage private sector

and capital market investments in SMEs - to be operational in 2014;

• Increase EIF’s credit enhancement capacity

• Gradually expand EIB trade finance scheme in favor of SMEs in

particular in programme countries

• Strengthen cooperation with national development banks & MS.

• Extend range of financial intermediaries where possible

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EIB Group enhanced support to SMEs

Risk Sharing Facility for innovative SMEs (RSI)

• Purpose: joint financial instrument to improve access to debt finance for

innovative SMEs and Small Mid-caps (< 500 employees) in support of their

research, development and innovation (RDI)

• How? EIF provides direct (and indirect) financial guarantees to selected

financial intermediaries based on portfolio analysis and review of operations.

EIF provides 50% guarantee on individual transactions. Initiative falls under the

Risk Sharing Finance Facility (RSFF) and benefits from EU budget

allocation.

• Status: joint pilot scheme launched end 2011 and rolled-out in 2013. Covers

12 EU MS so-far through 18 counterparties for guaranteed amounts over

EUR 950m; +170 transactions covered.

• The Growth Finance Initiative (GFI) provides loans of up to EUR 25 million

to mid-cap companies focusing on industry sectors that heavily rely on

research, development and innovation (RDI). Variety of financing solutions

ranging from senior secured debt to mezzanine financing.

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EIB Group: Innovative SME financing

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“Skills for Jobs – Investing in Youth” programme

• Purpose: EUR 6bn contribution to the EU effort to support youth employment by improving access to finance for SMEs (“Investing in Youth”) and to enhance employability via targeting projects focused on education, vocational training and student finance (“Investment in Skills”).

• How? Under the “Investing in Youth” window for SMEs, the EIB is developing pricing incentive schemes for SMEs and Mid-caps that confirm compliance with set criteria to hire young people (15-25yrs) or offer training to young people.

• Status: first loans for SMEs with dedicated amounts for SMEs employing youth have been signed.

• In addition, prioritising credit lines for SMEs in regions with youth unemployment of over 25%, aligning closely with the guidelines of the Youth Employment Initiative and the Youth Guarantee. By the end of October, EUR 2.7 billion had been allocated to youth-employing SMEs in these regions.

European Investment Bank Group 10

EIB Group: Innovative SME financing

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European Commission website showing banks or venture

capital funds that provide finance supported by the EU by

country (including EIB/EIF financial products):

http://europa.eu/youreurope/business/funding-grants/access-to-

finance/index_en.htm

Access to EU finance

Thank you!

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more information:

Monica Peña Sastre

m.penasastre@eib.org

Tel. : + 32 (0) 2 235 00 85

www.eib.org