- _Additionality._ Private investment in a company or project may occur independent of public participation, particularly when the expected financial returns are attractive. In this case, estimated multipliers would be overstated.

- _Projections._ Multipliers may refer to expected rather than actual investment volumes.

- _Expectations._ Multipliers can generate mechanistic or otherwise unrealistic expectations.

# **Box 6. The Public Capital Multiplier**

The concept of a public capital multiplier was first prominently used in the development of the Europe 2020 Project Bond Initiative (PBCE), adopted in 2012. It is defined as the ratio of total investment to public funds invested in a certain project. The multiplier can be calculated at the fund level and at the project investment level. The combination of the two levels results in the total or overall multiplier, as follows:

- Fund (or investment vehicle) multiplier = total size of fund or facility / public capital

- Investment multiplier = total invested in projects / fund size

- Total multiplier = total investment volume / public capital

Publicly available information on multipliers is very limited. Whereas the public capital multiplier is an explicit measure of success for and an integral part of the public disclosure of funds created by the European Union/European Investment Bank (EIB), other SIFs do not report their multipliers. The multipliers reported in the table below are therefore the result of estimates based on press releases and other publicly available data.

## **<u>Capital Multipliers of Selected Funds: Preliminary Estimates</u>**

|**Fund**|**Year**|**Capitalization**|**Fund Multiplier**|**Investment Multiplier**|**Total Multiplier**|
|---|---|---|---|---|---|
|EFSI|2015|€21 billion|1x|6.7x|6.7x|
|Marguerite|2010|€710 million|1x|11.8x|11.8x|
|GEEREF|2008|€112 million|2x|35.8x|~71x|
|ISIF|2014|€7.6 billion|1x|2.4x|~2.4|
|PAIDF|2007|$625 million|4.2|4|16.7x|
|PINAI|2012|$625 million|25x|_Unknown_|~_25x_|
|MMIF|2008|$408 million|5x|_10.3_|_51.7x_|
|FONSIS<sup>a</sup>|2016|€28 million|1x|9.6x|9.6x|
|PBCE|2012|€230 million|3x|~6x|~19x|

_Source:_ Adapted from Inderst (2016b **)** .

_Note:_ Multipliers in this table are World Bank estimates based on publicly available information on actual invested amounts, often referring to specific projects since detailed information at the portfolio level is generally not available. Furthermore, information on the public versus private share of capital invested at the project level is also not publicly available. As a result, estimates shown in this table are indicative only. Funds that are wholly owned by a government have a fund level multiplier of 1.

EFSI = European Fund for Strategic Investments; FONSIS = Fonds Souverain d’Investissements Stratégiques; GEEREF = Global Energy Efficiency and Renewable Energy Fund; ISIF = Ireland Strategic Investment Fund; MMIF = Macquarie Mexico Infrastructure Fund; PAIDF = Pan-African Infrastructure Development Fund; PINAI = Philippine Investment Alliance for Infrastructure; PBCE = Europe 2020 Project Bond Initiative.

a FONSIS provides an example of the multiplier effect through SIF investments. In February 2015, FONSIS completed the financing of a €43 million, 30 megawatt (MW) solar energy plant and its transmission line project in Santhiou Mékhé, 100 kilometers (km) from Dakar. The project is financed with 20% equity, distributed between FONSIS (32%), the French investment firm Meridiam (53%), and Senergy SUARL, where Meridiam is a majority shareholder (15%). Debt financing, 80% of the total investment, came from Proparco, the French Development Agency’s private sector arm. The project received a €3.5 million guarantee from the government of Senegal, resulting in an investment multiplier of 9.6 (Foce Consultora, 2016; Sud Quotidien, 2016). Based on available information, the multiplier for FONSIS is calculated from 15