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European Financial Services Round Table
 





Monday, April 23, 2018
Updated EFR Strategic paper: Facilitating European Infrastructure Investment

The European Financial Services Round Table (EFR) fully supports the further investment in European infrastructure and had therefore launched in 2015 an initiative which aimed at helping infrastructure to become a more accessible asset class for institutional sources of capital in Europe. In the EFR paper concrete proposals were done for greater transparency and harmonisation of project pipelines, structures, financing and performance. Furthermore, the need was recognised for availability of best practices and benchmarking / performance data to increase the supply of projects and public and private investor confidence in the sector.

The Argentinian G20 Presidency has made investing in infrastructure one of its top priorities. Infrastructure is considered to be critical to development, since investment in infrastructure boosts growth and productivity. Moreover, infrastructure provides the physical and digital access necessary for citizens to seize the opportunities of the future economy. The global infrastructure gap projected from now to the year 2035 amounts to USD 5.5 trillion according to some estimates. The Financial Stability Board has set up a working group on infrastructure to give input to the G20, while amongst others also the OECD plays its role in the G20/OECD task Force on Institutional Investors and Long-term Financing.

Some work streams of the current G20 Presidency include working on contractual standardisation and on financial standardisation. Greater standardisation of contracts and documentation in the bidding and procurement stages of an infrastructure project life cycle is considered to be critical to reducing their cost and complexity, as well as facilitating their comparability. Greater financial standardisation would reduce costs and facilitate allocations by institutional investors into infrastructure investment.

The EFR supports the G20 focus to make infrastructure a more accessible asset class. Since the EFR paper addresses exactly those issues that the G20 is working on, a factual update of the EFR paper has been made.

The enclosed EFR strategic paper on infrastructure calls for action in particular in:

  • making substantial progress in making infrastructure a standardised asset class.
  • enabling the private sector capital to crowd-in and help addressing the growing infrastructure gap by removing the barriers for infrastructure investments remain high due to regulatory hurdles or the lack of bankable projects.
  • helping reducing the highly fragmented market with project finance structures being very bespoke and heterogeneous across jurisdictions.
  • supporting the key role that multilateral and regional development banks, as well as the Global Infrastructure Hub, can play. Jointly, they should work with the private sector in developing a generally-accepted best practices framework. This collaboration can be initiated with a standardised industry template for debt disclosure and reporting requirements.
  • using the universal application of a generally-agreed template can strengthen investor rights, public and private cooperation in project financing can be ensured and the supply side of the infrastructure market can be promoted.