EIB_slides: S.Barnes_M.Ismaila_P.Brzezicka

Simon Barnes
Head of Advisory Services
Riga, Latvia 27.9.2018

2Innovation Finance Advisory | European Investment BankEuropean Investment Bank Group 2
EIB Advisory Services:
Harnessing relevant expertise
A single access point to
a comprehensive offer
of advisory and
technical assistance
services for innovation
A cooperation
platform to leverage
and exchange
expertise from EIAH
partners
Targeted advisory
support that is specific to
the sector and stage of
life of the company
Innovation
Finance
Advisory
European Investment
Advisory Hub

eiah.eib.org

The EIB Group
Presentation for the seminar on
Innovation – 21st Century Source of
Growth
27.09.2018 17/10/20184

The EIB Group
Provides finance and expertise
for sound and sustainable
investment projects
Leading developer of
portfolio-based risk financing
for innovative SMEs
17/10/20185

The EIB: the EU bank
17/10/20186
‣ Natural financing
partner for the EU
institutions since 1958
‣ Around 90% of lending
is within the EU
‣ Shareholders: 28 EU
Member States
Investing in
Europe’s growth

The EIB: capital breakdown
17/10/20187

The EIB at a glance
‣ Largest multilateral lender and borrower in the world
‣ We raise our funds on the international capital markets based
on our AAA credit rating.
‣ We pass on favourable borrowing conditions to clients
‣ Some 450 projects each year in over 160 countries
‣ Headquartered in Luxembourg with 40 local offices
‣ Around 3 000 staff:
‣ Not only finance professionals, but also engineers, sector
economists and socio-environmental experts
‣ 60 years of experience in financing projects
17/10/20188

EIB Group financing in 2017
17/10/20189
EUR 78.2bn
EUR 250bn
Total investment
supported

EIB Group supported investment
17/10/201810
169
231
245
230
280
250
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2012 2013 2014 2015 2016 2017
EIB GROUP signatures Total investment supported
* Change of
methodology after
2014

Our priorities
Environment Infrastructure Innovation SMEs and Midcaps
EUR
16.7bn
EUR
18bn
EUR
13.8bn
EUR
29.6bn
17/10/201811
‣ R&D
‣ Innovation
‣ Education and
Training
‣ Strategic Transport
‣ Competitive and
Secure Energy
‣ Integrated Urban
Development
‣ Sustainable
Transport
‣ Environmental
Protection
‣ Renewable Energy
and Energy Efficiency
‣ Via intermediaries

EIB Group financing in 2017: EUR 78.16bn
17/10/201812
Signatures
EFTA &
Enlargement
Countries
EUR 1.62bn
Eastern
Neighbours
EUR
0.88bn
Africa,
Caribbean,
Pacific,
South Africa
EUR 1.47bn
Asia, Central and
Latin America
EUR 1.99bn
Mediterranean
EUR 1.96bn
European
Union
70.24bn
Outside EU
7.91bn
EUR
EUR
Total EUR 78.16bn

EIB products
17/10/201813
We help catalyse investment
LENDING BLENDING ADVISING
Loans
But also:
Guarantees
(trade financing)
Equity participation
(through funds)
Combining EIB finance
with EU budget
(EIB +ESIF, EFSI)
Higher risk projects for
innovation (InnovFin)
Project preparation and
implementation support
Financial advisory
Attracting FUNDING for long-term growth

EIB project cycle
17/10/201814
We support sound and sustainable projects
EIB
project
cycle
Step 1 Proposal
Step 2
Appraisal
Step 3
Approval
Step 4
Signature
Step 5
Disbursement
Step 6
Monitoring
and reporting
Step 7
Repayment
• Financial
• Economic
• Social
• Environmental
• Technical
assessment
• EIB Management
Committee
• Investment
Committee
(for operations
potentially
benefiting from
an EU guarantee
under EFSI)
• EIB Board of
Directors
Finance contract is signed

Different Financing Structures
17/10/201815
+ABS/Covered Bonds
+Hybrid Instruments
EIB
Project
promoter
Project
EIB Bank
Project 1
Project 2
EIB
Government/
Self
Government
Project 1
Project 2
EIB Fund
Investee 1
Investee 2
EIB Project
Project
promoter

Benefits of EIB lending
‣ Attractive pricing ( based on low funding costs)
‣ Long tenors (up to 30 yrs)
‣ Flexible draw-downs
‣ Blending
‣ Possibility to use Technical Assistance
‣ “Quality stamp”
‣ EIB - a mission driven financial institution with in-
depth expertise in various sectors and markets
17/10/201816

EIB Group lending operations
‣ EIB total nominal exposure in Latvia: EUR 1.0bn as
at YE 2017 or 3.8% of GDP (compares to 3.4% for
the EU overall)
‣ Sectors and obligors: EIB supported projects mainly
in the energy and urban infrastructure sectors. In
the after-crisis years, the EIF provided a consistent
support to SME sector in Latvia. The majority of the
exposure is to the sovereign/sub-sovereign sector
(60%) and corporate sector (25%). The EIF
operations concentrate in the microfinance and
guarantee products.
17/10/2018European Investment Bank Group 17

Activity by sector
% of total exposure % of GDP, figures in EUR million
Exposure, Dec-2017 Signature flow
285
100
36
100
35
108
210
-
109
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2009
2010
2011
2012
2013
2014
2015
2016
2017
SMEs & intermediated
Manufacturing,miningandagriculture
Services
Socialsector
Telecommunications
Urban infrastructure
Transport
Energy
EUAverage
0%
20%
40%
60%
80%
100%
EU LV
LV EU
N°Counterparties(bytotal exposure): 12 2,093
N°Counterparties(bysignaturesin2017): 4 411
Average exposure tocounterparty(EURm) 84 245
LV 7.4 --
EU 6.4 18.4
2015 2012
FVAper1EUR(incent)LV EU
Exposure (EURbn) 1.0 513.7
Exposure (%ofGDP) 3.8 3.4

Lending operations in 2017
‣ Five loans signed in 2017 for the total amount of
EUR111 m:
‣ EFSI loan of EUR 75m with Riga Transport Company to finance the
purchase of 20 new low-floor tram units and the modernization of
tramway infrastructure and depot;
‣ EFSI loan of EUR30 m with the University of Latvia to finance
construction of new Research and Study Center;
‣ EUR 20 m regional investment in Baltcap Infrastructure Fund (EUR 3
m allocated to Latvia)
‣ EUR 50 m facility to finance construction equipment for Cramo in
the region (EUR 1 m allocated to Latvia)
‣ EUR 50 m facility to finance construction equipment for Ramirent in
the region (EUR 2 m allocated to Latvia)

Highlights of 2018-2019
‣ Three loans under appraisal in transport sector, two of them with a
strong focus on Climate Action: Pasazieru Vilciens Rolling Stock;
Latvian Railway Electrification Project; Riga Airport Upgrade under
EFSI.
‣ Ventspils onshore 50 MW wind power project (total loan amount of
EUR 58m) financing and E67/A7 Kekava bypass PPP project (loan
amount of EUR 53m) have been approved under EFSI, signing is
planned in 2019.
‣ Investment needs in public sector identified (mainly sub-
sovereign/municipal risk)– social housing, schools/hospitals
renovation, roads and public transport. Discussions to structure as
ESCO/PSC based structures. Minimum loan amount – ca. EUR10m,
50% of total project cost.
‣ The Bank is considering various options regarding the Baltic
representation, with the aim to make a decision until year end.

Thank you!
Marina Ismaila
Senior Public Sector Banker
Lending Operations in Poland and Baltic States
Public Sector and Infrastructure
98-100 boulevard Konrad Adenauer
L-2950 Luxembourg
+352 4379-83263 (office)
+352 691 284 271 (mobile)
m.ismaila@eib.org
www.eib.org

Access-to-Finance and Innovation Support
Paulina Brzezicka, Innovation Finance Advisory
Riga, 27 September 2018

This is who we are:
Innovation Finance Advisory (IFA)

Innovation Finance Advisory:
A multi-dimensional approach to innovation finance
 Identify funding gaps and market
barriers
 Develop business case for new
financing instruments
 Increase effectiveness of existing
Market Studies
 Advise companies on EIB and other
sources of financing
 Improve bankability/ investment
readiness
 Enable earlier/ faster access to
finance
Advisory Support
Innovation
Finance
Advisory
 Improve Project
Soundness/Bankability
Enhance Knowledge /
Market Intelligence
(e.g. Access-to-finance studies)
 Transfer bankable projects to
lending teams / investors
 Where necessary, recommend
internal EIB-managed instruments
and/or Investment Platforms (IP)
 Structure/implement IPs
Develop / Enhance
Financial Instruments
(e.g. Circular Bio-economy IP)
Lessons
Learned
Coaching &
Support
Market
Consultation
Financing

This is what we do:
Market studies

IFA Market Consultations:
Access-to-finance studies in priority sectors
Ongoing
Published
Access-to-finance studies
EARTO
Life Sciences
Circular and Bio-economy KETs I & II
Transport
Digital
Economy
Space
Agri-Food
Renewable
energy
5G
Access-to-
finance for
Gender
European
Innovation
Council Policy recommendations
Source new advisory
assignments
New financial products
to address identified
thematic funding gaps
Digital Economy II

Our studies cover a wide range of sectors experiencing access-to-finance issues. Despite their
diversity, we have identified certain common characteristics of the innovation financing challenge:
Excessive fragmentation
Information about financial instruments is often fragmented and European capital markets are
more fragmented and less developed vs. other regions
Available instruments too prescriptive
Funds can only be used for a very specific pre-approved purpose and it is difficult to adapt to
changing circumstances.
Gaps in ecosystem
The existing instruments do not cover the entire path from research to commercialization and
scale-up.
Lack of complementarity
Various existing instruments seem difficult to combine and a seamless transition from an
instrument to another is rare.
Information asymmetries
Investors lack specific sector / technology knowledge and companies often have limited
knowledge of typical considerations of investors.
1
2
3
4
5
Common traits of sectors in focus:
The challenge of financing innovation

IFA Market Consultations:
Analysis of priority sectors leads to new product launch
Circular Bioeconomy
Investment Platform
 Product: (venture debt), quasi-equity and
equity to address early- and late stage
funding gaps (ticket size TBC)
 Objective: To provide access to finance to
innovative bioeconomy projects, with a
priority (but not exclusivity) for innovative
circular bioeconomy projects
 Sector: Bioeconomy and circular
bioeconomy (application of the concept of
CE to biological resources, products and
materials). Projects focusing exclusively or
mainly on renewable energy generation
(fuels, heat or power) are not eligible.
Policy recommendations
Source new advisory
assignments
New financial products
to address identified
thematic funding gaps

Study Publication
Q4 2017 H1 2018 H2 2018 2019
Launch of Call for
Expression of Interest
Launched @
Innovative
Enterprise
Malta 2017
Market Consultation
Q3 2017
6th December 2017 Financing the
Circular Bioeconomy: Structuring
an Investment Platform to
Improve Access to Finance in
Europe
Identification of 2 key
funding gaps, in
projects moving from
pilot to demonstration
phases and from
demonstration to
commercial phases
150-participant workshop and
bilateral consultations provided
key market inputs on design,
structure and features of the TIP –
reflected in documentation
Planned publication: 1 October 2018
EC & EIB currently finalising:
• Documentation
• Selection Criteria
• Timelines
• Approvals
Final draft and publication of
Terms of Reference (TOR) and
the Call for Expression of
Interest (CoI)
European Commission and EIB
actively managing the process of setting up the CBIP
- Fund manager selection
- Contract negotiations
- Platform set-up/launch
Target first closing
Current
Status
Circular Bioeconomy:
From market study to financial instrument

Indicative Structure
Circular Bioeconomy Thematic Investment Platform
Investment
fund
(layered fund
structure
possible)
Fund Manager
(to be recruited)
Investment strategy (being
agreed with EC)
Management fee
Performance fee
Co-financing
a portfolio of projects
(equity & quasi-equity, etc.)
Eligible
Projects
co-financed by
other sources (at
least 50%), which
would create
additional
leverage on EU
contribution
Sources of funding:
• EIB, with 100% EC
guarantee under
InnovFin
• Possibly Private
investors
• Possibly other public
investors (e.g. NPB)
Funding
Eligible projects would
be selected by the Fund
Manager, in accordance with
the Investment Strategy

This is what we do:
Project advisory in practice

Innovation Finance Advisory
support
When?
…targeted intervention in the early stages of fundraising

IFA PA Portfolio – Selection IFA PA Portfolio – By Country
Summary
 Nearly 40 Active projects and 10 advanced leads at any point in time
 Profile of Promoters: 75% private, 25% public
 Currently 61 projects since January 2018 of which 8 have already been completed and 20
more are expected to be completed by end 2018
1000 projects screened
252 leads analysed in detail
53 completed assignments
34 projects passed to
lending teams / investors
Who?
…a diverse portfolio of project promoters

Currently procuring strategy consultant
InnovFin Advisory support
 Support in the formulation and validation of the
business plan
 Workshops, organizational and strategic support
in the context of consultancy engagement
 Identification of most optimal financing solution
 Bankability improvement and financing options
 Best practice and case study review
 Technical advice
 Multi-project campus
development
 Strategic re-positioning of the
university
 Complex project management
 Large funding requirements
 University seeking innovative
financing solutions
How?
Case study (1/2): University campus development in Latvia

In advanced due diligence for EUR 20m
EIB quasi-equity loan
September 2018
InnovFin Advisory support
 Identified the innovative company
 Reviewed and analysed business plan, market
perspective, business model, competitive landscape
 Engaged with the promoter to review and select
optimal financing option
 Guided management on EIB products and indicative
terms, acting as a financing pathfinder for the
company
 Provider of integrated industrial IoT
solution focused on the digitisation of
old manufacturing business
 Company with existing equity
investor base sees opportunity to
finance expansion of Polish R&D
activities with debt
 Winner of innovative industry awards
with an expanding foothold in CEE
- DG Connect, European Commission, 20171
(1) European Commission Website: https://ec.europa.eu/digital-single-market/en/blog/internet-things-iot-you-our-mission-and-vision
“We believe that the Internet of Things has the
potential to drastically improve our lives, our
work places and our industrial efficiencies and
capabilities while taking into account security,
privacy and trust requirements”
How?
Case study (2/2): Industrial IoT Platform expanding R&D in Poland

- I want to bring new professional investors in my capital
- I need EUR Xm for tech development and i don’t care where they come from
- I want as many grants as I can get
- I am the founder and I don’t want to dilute my share too much
- I want to diversify the funding sources
- I want to take my product to commercialisation as quickly as possible and will bootstrap
my company to get there
- …
Whatever the reason, first figure out:
1) HOW MUCH MONEY DO YOU NEED? 2) WHERE DO YOU PLAN TO GET IT FROM?
FUNDRAISING IS NOT A TRIAL AND ERROR
PROCESS
What next?
1/3 Plan how to finance your business activities

Equity and equity-like Debt Grants
TTs / VCs / BAs / Venture
Debt
Commercial banks Public institutions /
philantropies
UPSIDE DOWNSIDE POLICY
YOUR BUSINESS NARRATIVE NEEDS TO ADJUST
ACCORDINGLY
What next?
2/3 Adjust your “language” depending on the funding type

 Be prepared and have a well defined plan
 Be realistic, and do not hide potential risks
 People are as important as ideas
 Include the key messages in your executive summary using a clear
and succinct language
 Make sure your presentation is exhaustive and impactful
 Do not forget who your audience is. Investors do not always have
the technical expertise
 Show your passion, enthusiasm and commitment
 Be ready for tough questions, and do not take it personally
What next?
3/3 Present a realistic, comprehensive business plan

Get in touch with us!
Don’t hesitate to contact us:
innovfinadvisory@eib.org
http://www.eib.org/products/advising/innovfin-advisory
Paulina Brzezicka
Innovation Finance Advisory
Advisory Services Division
Phone: (+352) 4379 82176
Fax: (+352) 4379 52176
E-Mail: p.brzezicka@eib.org
European Investment Bank
100, boulevard Konrad Adenauer
L-2950 Luxembourg

40
Disclaimer
This presentation is incomplete without reference to, and should be viewed solely in conjunction with,
the oral briefing provided by the European Investment Bank (“EIB”).
The terms and conditions are intended as an outline for discussion purposes only and made on an
indicative basis. This presentation is provided without any liability whatsoever by EIB and shall not
constitute any obligation of EIB to extend credit facilities or to carry out a due diligence review of the
aspects relevant for the financing of a project.
Neither this presentation nor any of its contents may be duplicated, published or used for any other
purposes without the prior written consent of EIB.
European Investment Bank

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