On 26 November 2014, the European Commission announced its investment plan for Europe1 which is intended to facilitate investments in excess of €315 billion across the EU in the next three years alone. Outlined by the President of the European Commission Jean-Claude Juncker on 15 July 20142, the investment plan is required in order to stimulate growth and investment in the EU283. A new European Fund for Strategic Investment (EFSI) will receive €21 billion in guarantee and capital, which, with a multiplier of 15, could facilitate over €315 billion of investments. Some say that this is not feasible, too little and too late.
EFSI will be open ended and initially focus on investments to support strategic investments of European significance in infrastructure, notably broadband and energy networks, as well as transport infrastructure, particularly in industrial centres; education, research and innovation; and renewable energy and energy efficiency.
Although very much in its infancy, we believe that the investment plan for Europe could assist in creating significant opportunities for investors, financiers, governments, promoters and contractors on a global scale. Investors worldwide, particularly pension and insurance funds, are looking for predictable returns, both as equity investors and debt providers, filling a gap left by contracting banks. Faced with a more benign monetary policy environment and low interest rates together with a requirement for long-term investments, and attracted by a combination of relative value, low but stable yield, longterm matching of asset and liability and benefits of diversifying portfolios, a growing number of institutional investors are seeking to invest in infrastructure debt. At the same time, many banks that had previously curtailed long-term lending to projects and several new-entrant banks are now targeting particularly ancillary income opportunities.
Matching the availability of abundant funds with a willingness to explore innovative, but risk-mitigated, structures and viable projects will create opportunities.
In this briefing, we:
- outline the background and explore what the investment plan for Europe is
- highlight key issues
- consider financing and structuring issues
- address investment risks on an EU level.
Norton Rose Fulbright has extensive experience advising clients on all aspects of energy infrastructure projects across Europe. We would welcome the opportunity to discuss this with you in more detail. Contact Tomas Gärdfors or Simon Currie for more information.
European infrastructure opportunities - An investment plan for Europe (pdf, 7.79MB)