La Réunion: First Juncker Plan loan to boost enterprise support
Didier Robert, senator and President of the Réunion Region, and Ambroise Fayolle, Vice-President of the European Investment Bank (EIB), have officially launched the “Réunion Region Finance” fund-of-funds with the aim of boosting support for micro, small and medium-sized enterprises (MSMEs) throughout the territory of Réunion. Around 1 000 MSMEs will be able to benefit from this new initiative targeting overall investment of EUR 100 million.
“This unprecedented and promising new partnership between the Region and the EIB Group involves the creation of a powerful tool for financing the development of Réunion's SMEs” said Vice-President Fayolle during the signing ceremony. “By leveraging regional and EU funds with the capacities of the EIB Group, Réunion Region Finance, managed by our subsidiary the EIF, will be able to increase access to credit for businesses while fostering their growth and competitiveness”. He went on to say that “support for entrepreneurs and project promoters is a central plank of our activity at the heart of all the regions. This operation forms part of the EIB Group's ongoing support for the Réunion Region and its economic fabric, which to date amounts to EUR 1.3 billion of dedicated finance”.
“It is companies that create jobs, and we must together make available the necessary resources to enable project promoters to grow. The Region is positioning itself, together with the EIB, the EU and other partners, as the facilitator of entrepreneurship” said the Region's President, Didier Robert. The agreement signed by the Region and the EIB provides for a EUR 50 million commitment to be used for loans and guarantees for MSMEs. This is a large amount of funding that is essential to boosting Réunion’s economic fabric. It is important to support growth sectors like sustainable development, renewable energy, agrifood and digital. We must act together to promote business innovation in Réunion".
The creation of the Réunion Region Finance fund-of-funds represents a practical response to the financing needs of the island’s MSMEs. It will be endowed with EUR 50 million of public funds (from the Region, ERDF) enabling around 1 000 MSMEs to be supported over the next five years and representing total investment of EUR 100 million. In close partnership with the Region, the firms supported by this fund-of-funds will be able to benefit from two financial instruments developed by the European Investment Fund (EIF), the EIB’s specialist enterprise support and microfinance subsidiary: a debt instrument called a “Risk-sharing Loan”, and an equity-type facility called a “Co-investment Instrument”.
The “Risk-sharing Loan” will provide liquidity and credit risk protection to a financial intermediary so that it can build up a portfolio of new MSME loans in the region. Because of the risk-sharing, firms will be able to access bank financing on favourable terms more easily. The co-investment instrument will be geared to supporting final beneficiaries, i.e. unlisted eligible SMEs that have their registered office, a decision-making centre or a main or sufficiently important operating site in Réunion. Investment by Réunion Region Finance will strengthen the equity and quasi-equity of eligible firms in an amount tailored to their life cycle and specific needs.
As a trusted partner of the Region for a number of years, the EIB Group has invested EUR 1.3 billion in Reunion in support of private sector development, the upgrading of infrastructure, growth and employment in the region. Thanks to the activity of the European Investment Fund (EIF), the EIB’s specialist SME support and microfinance subsidiary, more than 900 firms have been assisted all over the island via the EU Cosme and Innovfin instruments.
This new financing operation brings to 89 the number of operations approved by the EIB Group in France in the framework of the Investment Plan for Europe – the Juncker Plan – representing total financing of over EUR 7 billion.