ABS loan for SMEs: EIB participates in securitisation deal with IKB Leasing
- Release date: 01 August 2014
- Reference: 2014-177-EN
The European Investment Bank (EIB) is providing IKB Leasing GmbH (IKBL) with EUR 97 million by purchasing asset-backed securities (ABS). The transaction was closed yesterday. It will contribute to further opening up the securitisation market for financing small and medium-sized enterprises (SMEs) in Germany.
The ABS transaction GMEF 2 was arranged by IKB Deutsche Industriebank (IKB) and Landesbank Baden-Wuerttemberg (LBBW). The EIB is investing in the senior tranche (Class A notes), which – like all classes of this transaction – is secured by German SME leasing receivables originated by IKBL. The EIB finance will in turn be used to support projects involving leasing finance that will be carried out in Germany or other EU countries by SMEs or midcaps (firms with up to 3 000 employees).
EIB Vice-President Wilhelm Molterer, who is responsible for the Bank’s financing operations in Germany, said that the transaction gave an important signal to investors. “The agreement with IKB-Leasing reflects the fact that financial markets are becoming more stable. By purchasing these ABS notes, the EIB is offering finance that goes beyond the traditional loan to SMEs. Because of its greater engagement in the ABS market the EIB will help to make this segment more attractive to other investors as well, so that in the future more finance will be made available to SMEs and midcaps.”
For IKBL, the EIB’s involvement in the transaction and thus the finance that will be made available will strengthen its business with SMEs and midcaps in Germany and other EU countries where IKBL is active in the market.
This is the first ABS transaction in which the EIB and IKB’s leasing subsidiary have worked together. The funds that will be made available to IKBL as a result of the EIB’s purchase of the notes will be used directly to strengthen new business. The EIB’s share will be capped at EUR 12.5 million per SME project. As IKBL agreed, as part of the deal, to at least double the EIB loan, a total of around EUR 200 million in the form of medium to long-term finance will be made available for investment projects by SMEs and midcaps, some EUR 100 million of which at favourable interest rates.
During the past few months, the EIB has repeatedly made available funds for SMEs and midcaps by way of securitisation transactions. Just recently, the Bank focused on providing finance for SMEs in rural areas of Spain. Previously, the EIB, together with Spain’s Banco Santander had made significant sums available to SMEs and midcaps operating in the industrial and services sectors. The EIB also provided Italy’s Creval Group with substantial funds for SMEs via an ABS issue.
Last year alone, the EIB and its subsidiary the European Investment Fund (which specialises in risk capital finance) provided a record amount of nearly EUR 22 billion for SMEs and midcaps, benefiting some 230 000 companies across Europe. Apart from SMEs, the EIB’s lending is focused on innovation, research and development, strategic infrastructure and resource efficiency.