European Investment Bank - SPRUCE evaluation: final report
This report sets out the findings of the final evaluation of the Scottish Partnership for Regeneration in Urban Centres (“SPRUCE”) fund, undertaken by the Indigo House Group on behalf of the JESSICA Holding Fund Scotland.
Appendix II – VFM
| NPV appraisal (litmus test of VFM) Draft - to be finalised following discussion | SPRUCE (current 10 year fund) | SPRUCE Longer term Revolving Fund | ||
|---|---|---|---|---|
| To Dec 2023 | To Dec 2026 | Recycled fully 1 re-cycle | Recycled fully 3 re-cycles | |
| Option 1: SPRUCE intervention | £50,073,423 £0.38 12/2025 £68,087,025 n/a | 40% Recycled £57,143,205 £0.43 12/2025 £79,966,992 n/a | 0% £71,429,007 £1 £57,490 £78,846,992 | 0% £60,714,656 £0 £48,867 £77,166,992 |
| Gross NPV at 3.5% NPV per £1 invested Yr fully repaid Cash available for future reinvestment Cash at Year 30 | ||||
| Discount rate sensitivity Gross NPV at 2.5% NPV per £1 invested | £54,291,803 £0.41 | £61,682,890 £0.45 | £77,103,612 £0.56 | £65,538,070 £0.48 |
| Option 2: Non Repayable Grant | -£103,847,123 -£0.80 Nil | n/a n/a n/a | n/a n/a n/a | n/a n/a n/a |
| Gross NPV at 3.5% NPV per £1 invested Cash available for future reinvestment | ||||
| Discount rate sensitivity Gross NPV at 2.5% NPV per £1 invested | -£111,320,698 -£0.86 | n/a n/a | n/a n/a | n/a n/a |
| Option 3: Structured Finance (10 year term) | £96,522,103 £0.72 n/a n/a n/a | -£9,057,088 -£0.07 2031 n/a n/a | n/a n/a n/a n/a n/a | n/a n/a n/a n/a n/a |
| Gross NPV at 3.5% NPV per £1 invested Yr fully repaid Cash at that year Cash available for future reinvestment | ||||
| Discount rate sensitivity Gross NPV at 2.5% NPV per £1 invested | -£103,015,802 -£0.77 | -£1,370,640 -£0.01 | n/a n/a | n/a n/a |
Notes:
1. Current fund partially recycled in initial 10 year term as substantial repayment not due until 2023-2025
2. SPRUCE appraisal includes cost of fund operating costs (Amber + EIB). SPRUCE outperforms other options, after allowing for fees.
3. SPRUCE cashflow valuation stronger as cash repaid and recycled earlier.
4. Grant option is negatively valued in short, medium and long term.
5. 10 year structured finance intervention is negatively valued in short and medium term, but positive over longer term highlighting the longer payback period involved.
6. Fee level on Structured Finance assumed at same level as SPRUCE. No fees assumed on Grant Provision as Assumed Marginal Absorption by SG.
Contact
Email: david.cowan@gov.scot
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