European Investment Bank Supporting investment in strategic infrastructure Peter Jacobs & Khalid Naqib Financing Welsh Infrastructure 24-25 March 2015: The Celtic Manor, Wales 25/03/2015 The European Investment Bank 1

The European Investment Bank Short introduction Investment priorities, areas of engagement The ‘Juncker Plan’ Deals with EIB involvement in the UK Focus on Project Finance/PPP Project Appraisal Process Funding Structures Market observations PF deals with EIB involvement across Europe 25/03/2015 The European Investment Bank

Short introduction to EIB Providing finance for sound and sustainable investment projects. Shareholders: 28 EU Member States. Largest multilateral lender and borrower in the world. Raises funding as an AAA issuer and passes on the advantage to borrowers Projects in over 160 countries. Key products: 25/03/2015 The European Investment Bank 3

Supporting EU policy goals EIB’s investment priorities align with the EU’s policy goals Sustainable growth and jobs in Europe Innovation and skills Trans-European Networks Sustainable, competitive and secure energy Financing smaller businesses Economic and social cohesion Special support for economically weaker regions Helping regions absorb EU funds Environmental sustainability Climate action Sustainable transport 25/03/2015 The European Investment Bank 4

Eligibility for EIB funding Projects that EIB finances must meet some requirements: Align with at least one of the EIB’s policy objectives Technically sound Financially viable Show an acceptable economic return Comply with environmental protection and procurement regulations 25/03/2015 The European Investment Bank

The European Investment Bank Some recent UK deals £500m London Crossrail £350m Vodafone Mobile £1500m National Grid United Utilities THFC Affordable Housing £150m Port of Liverpool WBS 25/03/2015 The European Investment Bank

Past EIB engagement in Wales Norgine Pharmaceuticals, Hengoed New Swansea University campus Welsh Water Social housing across Wales Ford Engine Plant, Bridgend 25/03/2015 The European Investment Bank 7

Infrastructure (transport, health, utilities) Energy & climate action Areas of engagement Infrastructure (transport, health, utilities) Energy & climate action Skills & innovation Social housing Urban regeneration SMEs Examples of potential projects Swansea - university, trains depot Velindre Hospital A465 Widening M4 Broadband rollout 25/03/2015 The European Investment Bank

The European Investment Bank The Investment Plan for Europe (IPE) 25/03/2015 The European Investment Bank

The European Investment Bank The ‘Juncker’ Plan The Investment Plan for Europe: What`s next? By mid - 2015 The new European Fund for Strategic Investments (‘EFSI’) is operational. A transparent pipeline of projects is in place at EU level, which will be developed over time. The new investment advisory hub is operational. Follow up activities have started at EU, national and regional levels, together with relevant stakeholders. A dedicated website allows progress on the Investment Plan to be monitored in real-time. By mid - 2016 Progress will be reviewed, including at the level of Heads of State and Government. Further options may be considered ahead of the mid-term review of the Multi-annual Financial Framework. 25/03/2015 The European Investment Bank

The European Investment Bank Conclusions Cornerstone lender for infrastructure across the UK Strong commitment to support long term investment in Wales Support for riskier projects under the Investment Plan for Europe 25/03/2015 The European Investment Bank

Focus on PF/PPP: How EIB adds value Leading player in the Project Finance/PPP market in Western Europe Reliable partner in good times and bad EIB pricing improves VfM and reduces cost to taxpayers/ customers Cornerstone investor – catalytic impact attracting co-funders Signal of quality – long term lender Bridging public and private: close links with HM Treasury and public authorities Adaptable product offering Early involvement to test bankability      25/03/2015 The European Investment Bank

Funding structures: an adaptable product offering Traditional long-term senior debt Hybrid debt + capital market Co-funding with new debt funds Hybrid EIB-equity limited recourse Government / ECA guarantees Construction financing to bond takeout Contingent mezzanine/ bonds Funded mezzanine Loan Guarantees TEN Transport 25/03/2015 The European Investment Bank

The European Investment Bank When to engage EIB 25/03/2015 The European Investment Bank

The European Investment Bank Market observations Wales Promising developments on NPD delivery model Pipeline of projects in development Renewable energy projects more advanced Across Western European markets Strong liquidity Competition returning Appetite for risk Limited number of greenfield projects Emergence of alternative funders and/or funding structures Draghi impact on liquidity and pricing Investors increasingly comfortable with higher (e.g. construction) risk Rating agencies adopting positive stance 25/03/2015 The European Investment Bank

Some recent PF projects UNITED KINGDOM London Gateway Port €300m FRANCE Contournement Nîmes-Montpellier €450m BELGIUM C-Power Offshore Wind €260m THE NETHERLANDS A1 / A6 Motorway €90m IRELAND Irish Schools Investment Programme 25/03/2015 The European Investment Bank

The European Investment Bank Thank you! More information at: www.bei.org info@bei.org Tél. : +352 4379-22000 25/03/2015 The European Investment Bank 17

The European Investment Bank Reserve slides 25/03/2015 The European Investment Bank

Product line: senior or subordinated EIB project bond credit enhancement EIB senior debt EIB Senior debt Banks Bonds (PP or Public) Bank/Bond hybrid Equity other Public Bond Issue EIB PBCE (subordinated debt) 25/03/2015 The European Investment Bank

Focus on Project Finance/ PPP How does EIB add value? Established and experienced PPP lender Bridging public and private Provides both liquidity and low pricing (AAA rated) Reliable partner in good times and bad Attractive lending terms (size, tenor, pricing) Signal of quality – long-term lender Flexibility- adaptable to a variety of funding structures Track record of delivering 25/03/2015 The European Investment Bank 20