Bulgaria: Investment Plan for Europe takes hold in Bulgaria; EUR 300m of EIB loans, guarantees, equity in 2017

• The EIB Group provided EUR 300m of investment in Bulgaria in 2017 – 0.59% of the country’s GDP, above the EU average of 0.46%.
• Four EIB corporate projects received EUR 160m in loans; two of these projects were backed by a guarantee from the European Fund for Strategic Investments, an EU vehicle to kick-start the economy.
• The EIB also supported the priorities of the Bulgarian EU Council Presidency. 

EIB investment in Bulgaria in 2017

The European Investment Bank Group, comprising the European Investment Bank (EIB) and its subsidiary, the European Investment Fund (EIF), provided close to EUR 300m of new loans, guarantees and equity investment in Bulgaria in 2017. EIB loans totalled EUR 250m, while EUR 49m was provided by the EIF to facilitate the investments of small businesses to support their growth and competitiveness.  

The EIB Group’s support for Bulgaria reached some 0.59% of the country’s GDP, above the EU average of 0.46%. The EU bank launched lending to private corporates backed by a guarantee from the European Fund for Strategic Investments (EFSI), part of the Investment Plan for Europe. Total investment triggered by these transactions reached EUR 1.58bn. 

In 2017, the EIB celebrated the 25^th anniversary of its first lending operation in Bulgaria. Over this period, the EIB supported 79 projects and the EIF implemented 56 operations in Bulgaria. The total cumulative EIB lending commitment in the country amounts to EUR 5.1bn since the launch of the Bank’s operations there in 1992. 

Fostering the development of the Western Balkans

The EIB is the most active International Financial Institution in the Western Balkans region with loan approvals reaching EUR 8bn over the past ten years while the EIF has committed more than EUR 200m, raising more than EUR 900m of investments since 2011. The EIB Group is further committed to supporting the priorities of Bulgaria’s EU Council Presidency such as the development of transport corridors and the digitalisation of the region. 

EIB Vice-President Vazil Hudák commented: “For a quarter of a century, the EIB has assisted Bulgaria with reducing regional disparities and increasing competitiveness by financing critical infrastructure and small and medium-sized enterprises. Last year, we reached out to private corporates directly for the first time, and the pipeline for this year is just as promising.” 

First private sector EFSI loans in Bulgaria

Two lending operations were concluded under the European Fund for Strategic Investments (EFSI), which is part of the Investment Plan for Europe, or “Juncker Plan”, and which enables the EIB to finance operations that do not easily attract funding due to their higher risk profile. More specifically, the EIB signed the following loan agreements: 

• A EUR 31m loan to Oliva AD – Bulgaria’s leading sunflower oil producer and grain trader. The company is using the EIB loan to finance the construction of a new sunflower oilseed production plant and storage and logistics facilities in the Beloslav municipality near Varna.
• A EUR 100m loan to Biovet – a subsidiary of the pharmaceutical company Huvepharma International – to finance a planned increase of production capacity and R&D activities in the area of animal health. This operation will strengthen the competitiveness of a leading company in the veterinary pharmaceutical sector in Bulgaria, reinforcing Europe’s leading position in the animal health market. 

Promoting digitalisation and RDI in the aviation industry

The EIB supported the RDI activities of Software AG in relation to new software products used for the digitalisation of business processes. The project, which involves investments in several EU Member States, focuses on software applications related to the Internet of Things and the management of big data. The EUR 23m loan is supporting the upgrading of internet interconnectivity in Bulgaria.

The EU bank has also provided a EUR 55m loan to the French aviation systems manufacturer Latecoere for innovation and capacity expansion. EUR 6m of this amount will be used to finance the construction of a new assembly plant in Plovdiv, Bulgaria’s second largest city. The first stage of the Bulgarian part of the project is expected to generate over 200 jobs.

Fostering municipal transport

The EU bank signed a loan agreement for EUR 56m to finance the construction of the first stage of Sofia Metro line 3, including a 7.8 km-long twin-track metro line, eight metro stations, a train depot and the supply of 20 metro trains and a control system. This investment will help reduce reliance on private cars and increase the modal share of public transport, thereby contributing to climate change mitigation and positively affecting the economic and social development of Sofia.

Support for SMEs and mid-caps

In 2017, the Bank concluded EUR 40m of intermediated lending with two EIB partner financing institutions, further improving the access of Bulgarian SMEs and municipalities to EIB financing:

• A EUR 30m loan will enable Raiffeisen Leasing Bulgaria to better address the needs of SMEs and mid-caps, which are the backbone of the Bulgarian economy. It is expected that more than 150 companies operating in Bulgaria in agriculture, manufacturing, transportation and storage will benefit from this loan. 
• A EUR 10m loan to Procredit Bank to co-finance smaller projects implemented by SMEs and mid-cap companies in Bulgaria. 
• Signed in 2016, the SME Initiative in Bulgaria was successfully launched in early 2017, with guarantee agreements concluded with ten partner banks in the country. By the end of 2017, more than 2 000 individual SME loans had been originated under the programme in Bulgaria providing total financing of approximately EUR 300m to small businesses, thus reaching 50% utilisation in the first year of implementation. Approximately 10% of this financing was used to support RDI in small businesses. 
• The EIF committed EUR 49m in four guarantee operations, aimed at raising EUR 327m.