- First InnovFin Midcap Guarantee in Europe
- EUR 200 million for innovative firms in Germany
- Midcaps benefit from increased credit risk guarantees
The European Investment Bank (EIB) is again making available substantial funding for midcap companies in Germany. Innovative firms with up to 3 000 employees will be eligible for the first “InnovFin Midcap Guarantee” transaction, for which the EU bank is providing a guaranteed financing framework of up to EUR 200 million. Commerzbank is receiving the funds to hedge the risk on new loans, especially to customers undertaking research and development.
The new financial instrument is based on risk sharing and aims to create more growth and competitiveness in Europe. It will enable the EIB to provide a 50 percent credit risk guarantee to the intermediary financial institute – Commerzbank. The new guaranteed loans will be granted by Commerzbank to innovative midcap companies. The guarantee will enable the release of regulatory capital, thus allowing Commerzbank to increase its lending capacity with the same capital investment.
The European Commission is supporting the financing operation under the EU’s new R&D framework programme, “Horizon 2020”. Companies active in the research and development field will in particular be provided with reliable long-term financing. The EIB guarantee will cover up to 50 percent of individual investment costs with a cap of EUR 25 million per project. Commerzbank will complement the loans per project to the tune of at least the amount of the EIB guarantee.
EIB Vice-President Wilhelm Molterer emphasised the strengths of the new InnovFin MidCap Guarantee: “This new instrument allows for more risk-taking when financing innovation. And it will give intermediaries more freedom of choice in their selection of projects to be financed. These are the right measures to strengthen those companies that are particularly innovative – thereby helping to boost growth and competitiveness in Europe in the medium and long terms. At the same time, the instrument will enable the participating banks to respond to the firms’ financing needs more quickly and flexibly” said Mr Molterer.
“As the leading bank for Germany’s smaller businesses, we have been using the financing opportunities offered by promotional banks for many years”, said Holger Werner, Commerzbank‘s Head of Corporate Banking. “With this dedicated lending programme we will be able to meet the needs of our smaller business customers, especially those mounting innovative projects, offering them individual long-term financing solutions with flexible interest rates and maturities.”
The Commerzbank facility is supported by the “InnovFin – EU Finance for Innovators” MidCap Guarantee instrument, with the financial backing of the European Union under Horizon 2020. InnovFin is a new range of EIB Group products designed to facilitate access to finance for innovative businesses.