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Financing for Research & Development

Financing for Research & Development. Luigi Armeli Senior Loan Officer Financial Institutions and Human Capital. STRUCTURE OF PRESENTATION. Innovation 2010 Initiative: investing in human capital. University financing: the situation in Italy. Big requirement for infrastructure upgrading…

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Financing for Research & Development

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  1. Financing for Research & Development Luigi Armeli Senior Loan Officer Financial Institutions and Human Capital

  2. STRUCTURE OF PRESENTATION • Innovation 2010 Initiative: investing in human capital. • University financing: the situation in Italy. • Big requirement for infrastructure upgrading… • … but limited public funds. • Considerable potential for raising external resources. • Some examples. • The EIB, an institutional financial partner. 2

  3. European InvestmentBank Innovation 2010 Initiative: investing in human capital • The i2i initiative, which was launched by the EIB to meet the objectives laid down by the 2000 Lisbon European Council, focuses on three priorities: • education and training; • research and development; • information and communications technology networks • with the general aim of raising up to EUR 50bn in financial resources between 2000 and 2010.

  4. European InvestmentBank University financing: the situation in Italy • In the past two years, the EIB has implemented a structural support programme for Italy’s higher education system, targeting both universities and the institutional players concerned (Ministry for Universities and Research, local authorities, banking foundations). • In 2005-2006, the EIB approved loans totalling over EUR 800m in favour of Italian universities, of which EUR 300m have already been signed. • The EIB is now perceived as playing a key role in financing the university system in Italy.

  5. European InvestmentBank 3. Big requirement for infrastructure upgrading… • Universities are generally located in city centres, in buildings that are of great historical value but often run-down, overcrowded and ill-suited to modern educational standards (student areas, upgrading of IT systems, associated facilities). • Research activities (especially in technical and scientific faculties) require ever more costly laboratories and high-tech equipment as well as infrastructure that complies with the applicable safety and pollution regulations.

  6. European InvestmentBank 4. … but limited public funds • Gradual restriction of public contributions in view of the limits imposed by the Stability Pact. • Ordinary financing (70% of public universities’ revenue on average) primarily used to cover staff costs. • Criteria governing the distribution of resources are still too rigid (despite some recent improvements). • Major delays in receiving ordinary public transfers.

  7. European InvestmentBank 5. Considerable potential for raising external resources • Own resources… • Enhancing the value of real estate assets (via a change in accounting practices for universities). • Systematic exploitation of the results of research (patents, spin-offs, venture capital). • Partnerships with the private sector. • … and debt-servicing capacity. • Financial autonomy with respect to central institutions (within the statutory prudential limits). • Debt sustainable in the long term in accordance with operating margins.

  8. European InvestmentBank 6.1. Some examples • Politecnico di Milano (EUR 150m): example of effective cooperation between the City and the university in the context of a major urban regeneration project in a former industrial area. • Politecnico di Torino (EUR 40m): strategic partnership with General Motors in the field of automotive research. • La Sapienza University (under appraisal) and Bologna University (EUR 120m): Italy’s two largest universities, undergoing decentralisation. • San Raffaele di Milano (EUR 200m): synergies between teaching, scientific research and medical applications.

  9. European InvestmentBank 6.2. Some examples • Trento University (EUR 150m): first bond issue by an Italian university and a partnership with Microsoft for IT applications in the field of biological sciences. • Bocconi University (EUR 120m): establishment of a university campus in the centre of Milan. • Politecnici Italiani Student Loan (EUR 25m): direct support for poorer students with the cooperation of universities and the Banca Intesa network.

  10. European InvestmentBank 7. The EIB, an institutional financial partner • The value added of EIB participation: • Long-term support (generally up to 25 years) for universities’ investment plans. • Possibility of fixed-rate financing over long periods at the keenest market terms. • Focus on the quality of projects and the feasibility of investment programmes. • Sharing of financial models with universities and joint assessment of their ability to bear the debt burden. • Capacity for involving other institutional players (e.g. banking foundations).

  11. http://www.eib.org

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