Is it possible to predict the capital contribution (drawdown) profile of EIB’s private equity fund investments? This was the question asked to Esade students in the framework of a capstone project with the EIB.

The EIB can provide equity financing primarily investing or co-investing along with funds focused on infrastructure, the environment, or small- and medium-sized enterprises and mid-size corporations. In some cases, it also provides direct quasi-equity financing to support innovative companies in seek of financing to grow. This exposes the Bank to liquidity risk as it has to maintain an adequate buffer.

Based on a sample of 619 funds from 1972 to 2023 the students studied the capital drawdowns.

Using the Yale and the stochastic models the five students created a quantitative approach for modelling the drawdown profile of EIB equity investments.

Capital contributions are heavily concentrated in the initial years of the fund’s life, and marginally diminish as time passes. Click here for the presentation

Capstones are student consultancy projects organised by the EIB Institute in which teams of four to six Master’s students work on topics chosen and supervised by an EIB Group staff.

From left to right: Pablo Diez, Pere Casellas, Mariana Restrepo, Professor Carmen Ansotegui, Nikitas Kitsantas, Jorge Andreu, Leonidas Panagiotidis (EIB)