The European Investment Bank (EIB), in its capacity as the manager of the JESSICA Holding Fund Moravia-Silesia, has signed two contracts with Contera UDF MS s.r.o in cooperation with Volksbank CZ a.s. (“CONTERA”) and Českomoravská záruční a rozvojová banka, a.s. (“CMZRB”), establishing two Urban Development Funds (UDFs) to operate in the Moravia-Silesia Region (Czech Republic).

Regional Council of the Moravia-Silesia Cohesion Region i.e. Managing Authority of Moravia-Silesia Regional Operational Programme was a pioneer in the Czech Republic in the establishment of a JESSICA Holding Fund (HF) within the EIB with the aim of deploying EU Structural Funds for city investments in a revolving manner. The respective Funding Agreement was signed on 8 February 2010 for an amount of EUR 20 million (approx. CZK 507 million) with the main objective of enhancing the region’s economic potential through the revitalisation of degraded urban areas and strengthening of its business environment.

The two UDFs set up with the support of the EIB will initially invest approximately CZK 341 million (EUR 13.7 million) through loans for projects aimed at brownfield revitalisation, development of tourism and improvement of public service infrastructure. The remaining funds will be allocated to one or both UDFs at a later stage. The two UDFs are expected to focus their investments in a wide range of projects including: regeneration of brownfields through site preparation and construction of technical, transport and entrepreneurial infrastructure, revitalisation of historical monuments, development of sports and recreational facilities and investments in healthcare, education and social service infrastructure.

Background notes:

CMZRB, the Czech-Moravian Guarantee and Development Bank, 72% State-owned, is the only development bank in the Czech Republic with a remit to facilitate the implementation of the government’s nationwide economic strategy and the individual regional policies through the administration of national or EU funds under the assistance programmes. Its primary activity is focused on providing assistance to small and medium-sized enterprises (SMEs), the implementation of state policy aimed at funding projects improving regional technical infrastructure, and the reconstruction of panel-block apartment houses.

Contera UDF MS s.r.o. is a special purpose vehicle (SPV) managed by a company well established in the regional market (Contera Management s.r.o) and specialised in the field of property development, project management and construction management. The UDF will cooperate closely with Volksbank CZ a.s. Volksbank CZ has been successfully present in the Czech market since 1993, where it has gained a firm position in the segment of small and medium-sized banking institutions. Its business is targeted on private clients, small and medium-sized companies, joint ventures and towns and municipalities.

JESSICA (Joint European Support for Sustainable Investment in City Areas) is one of the Cohesion Policy Joint Initiatives that were developed by the European Commission to contribute to making EU Cohesion Policy more efficient and sustainable. The JESSICA mechanism is based on cooperation between the Commission, the EIB and the Council of Europe Development Bank (CEB) and supports investments in sustainable urban development and regeneration.

This initiative, designed to increase the use of financial engineering instruments, allows Managing Authorities to use part of their European Structural Fund allocations to invest in revolving funds rather than providing one-off grant financing. By so doing, the authorities can recycle financial resources in order to enhance and accelerate investment in urban areas. These investments, which may take the form of equity, loans and/or guarantees, are delivered to projects via Urban Development Funds and, if required, Holding Funds. The JESSICA Holding Fund for Moravia-Silesia, established in February 2010, is the only Holding Fund in the Czech Republic to date.