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Smart Infrastructure Finance
Published in Karen Wendt, Green and Social Economy Finance, 2021
Peter Adriaens, Antti Tahvanainen, Matthew Dixon
It is no surprise that policymakers have resorted to blended finance models to supplement subsidies and low-cost financing to stimulate local economies and execute on visions for industrial renewal, and infrastructure investment. For example, the creation of a European Fund for Strategic Investment (EFSI)—also known as the Juncker plan—aimed to stimulate a multiplier effect of 1:15 in real investment in the economy, totaling $436 bn. (350 bn. Euro), by leveraging $26 bn. (21 bn. Euro) in public funds. Most of this investment is aimed at infrastructure and investments in small and medium enterprises (SME), for example using Long-Term Investment Funds (LTIF) (European Commission 2015) or life insurance investment funds (CIPR 2017). Traditionally, an insurer can get infrastructure exposure by buying municipal bonds or bank loans. However, direct investments in infrastructure projects through vehicles such as the LTIF are ideal for an insurer portfolio. They lead to long lived assets, generate predictable revenue over their life and are highly illiquid providing a better return and reducing reinvestment risk. Each stage of an infrastructure project (i.e., planning and design, approval and construction, operation and then maintenance) involves different risks and attracts investors with appropriate risk profiles. MARFs are an articulation of an alternative asset focused LTIF or insurance fund and comprise smart allocation of liquid and illiquid assets to drive value and economic growth.
Tackling Europe’s infrastructure needs: the European Fund for Strategic Investments
Published in Journal of Mega Infrastructure & Sustainable Development, 2019
When the then President elect of the European Commission (EC), Jean Claude Juncker, first proposed an Investment Plan for the European Union (EU) (‘the Juncker Plan’) to kick start the sluggish European Economy once he took office, an important component was creation of the European Fund for Strategic Investment (EFSI). As the implementing vehicle for the Juncker Plan, EFSI is an overt contra-cyclical device designed to stimulate Europe’s ponderous economy, by raising effective demand through public investment. It aims to exploit the opportunity to address Europe’s infrastructure needs in an environment where historical interest costs are low and liquidity relatively plentiful for credit worthy projects, but where higher risk projects are often stalled, finding it very difficult to attract funding in an increasingly cautious economic environment. EFSI seeks to address the resulting impasse and achieve a significantly net positive impact by inserting itself as a guarantee fund to the European Investment Bank investment into the hitherto under-served and riskier infrastructure project arena. This is a risk category that, unlike the creditworthy and only occasionally sub-investment grade projects, has not been well served by commercial and indeed public finance to date.
Investigating EU financial instruments to tackle energy poverty in households: A SWOT analysis
Published in Energy Sources, Part B: Economics, Planning, and Policy, 2019
Edit Lakatos, Apostolos Arsenopoulos
Presented in 2015, EFSI, commonly referred to as the “Juncker Plan”, emerges as an opportunity to finance quick and cost-effective construction of new dwellings and long-term investment schemes. The program is based on a quasi-Public-private partnership model: the European Commission is providing a guarantee fund, while stimulating private investors to contribute.