EIB Group proposes first operations for EFSI guarantee and rolls out the Investment Plan for Europe
- Release date: 22 April 2015
- Reference: 2015-086-EN
The first projects and transactions earmarked for benefitting from an EU budget guarantee under the European Fund for Strategic Investments (EFSI) have been approved by the Boards of the European Investment Bank (EIB) and the European Investment Fund (EIF) this week. Under the EFSI initiative, expected to support EUR 315 billion of investment, the EIB Group will assume risks in projects to encourage greater private and public sector investment. The initiative will be managed by the EIB, Europe’s long-term lending institution owned by the 28 EU member states, and the EIF, the risk financing arm within the EIB Group.
“When the Investment Plan for Europe was launched by President Jean-Claude Juncker, the EIB promised to get the ball rolling and support new investment before the formal establishment of EFSI. We have delivered on this commitment. Approval of the first EFSI earmarked projects and transactions come four months after President Juncker and I announced the Investment Plan, and one month after the EU Bank achieved, nine months earlier than planned, additional lending targets agreed for the 2013 capital increase. The projects approved yesterday will improve innovation, healthcare, transport and industry, all sectors crucial for Europe’s economic growth. Stimulating new investment in these and many more projects is essential to enhancing Europe’s competitiveness. Likewise, the first four EFSI earmarked transactions by the EIF are crucial in extending our support to innovative SMEs and midcaps which are the backbone of the European economy. EFSI will allow the EIB Group to do much more of the cutting edge, innovative transactions that it knows well how to do based on past experience,” said Werner Hoyer, President of the European Investment Bank.
The EIB’s first EFSI earmarked projects include investment in healthcare research in Spain, expansion of a key airport in Croatia, the construction of 14 new healthcare centres across Ireland and backing for industrial innovation in Italy. The EIB board approved loans totalling up to EUR 300 million for projects expected to be financed under the EFSI initiative that will support overall investment of around EUR 850 million for public and private sector projects.
The approval follows detailed technical and financial due diligence by the EIB. Following EIB board approval, legal and financial negotiations for the projects are expected to be concluded in the coming months. Further operations expected to be submitted to the EIB Board in the coming months include renewable energy and energy efficiency projects, support for research, development and innovation, digital and social infrastructure projects, and more SME lending.
The first EIF transactions under EFSI to stimulate growth and competitiveness of European enterprises were also given the go-ahead earlier this week. On Monday, the EIF’s Board of Directors gave its approval for transactions that are expected to mobilise investment of EUR 1.3 billion in total. These loans will initially be provided in France, Portugal and the United Kingdom, in partnership with local financial intermediaries, including National Promotional Banks and Institutions. Among these first agreements to boost innovative SME lending is Bpifrance. Further transactions are expected to follow in the upcoming months.
Support from the EFSI guarantee will allow the EIF to double its support for SMEs compared to that originally planned over the next 30 months The EIF now expects that EFSI backing will allow it to stimulate additional lending volumes to SMEs and midcaps of around EUR 20 billion..
Technical and financial due diligence for investments expected to be supported under the EFSI initiative, as well as financing of projects once loans are agreed, is being carried out by the EIB alongside ratification of the proposed structure and EU budget support for the new initiative by the European Parliament and Council.
Lending under EFSI is expected to be backed by a core endowment of EUR 21 billion, comprising EUR 5 billion from the European Investment Bank and a EUR 16 billion guarantee from the EU. This initial capital will strengthen capital market borrowing and onward lending capacity by the European Investment Bank, the world’s largest multilateral borrower and lender. With the help of the EFSI backing, the EIB Group will support investment in infrastructure, innovation, and improved access to finance for SMEs and midcaps alongside other sources of finance, including the EU Budget. In this way the new initiative is expected to mobilise EUR 315 billion of new investment, mostly from the private sector, over three years once ratified.
Projects approved prior to the formal establishment of EFSI will be submitted to the European Commission and relevant bodies once in place to determine whether the EU guarantee can be used to back them. The EIB Group is committed to taking the projects on its balance sheet even if the guarantee should be found not to apply.