Agreement will provide EUR 200m to viable companies that have undergone a restructuring process
The European Investment Bank (EIB) and Instituição Financeira de Desenvolvimento (IFD) are taking a new step towards providing finance to small and medium-sized Portuguese companies that have successfully undergone restructuring processes and need funds to invest in innovation with the aim of becoming more competitive. The two institutions will together provide EUR 200m to support the modernisation and capitalisation of Portuguese SMEs and mid-caps. The EU bank will grant a EUR 100m loan to IFD and the Portuguese national promotional institution will ensure that financial intermediaries match the EIB loan with at least the same amount for the benefit of SMEs and mid-caps.
This initiative is designed to implement another of the measures provided for in the Ministry of the Economy’s “Capitalise” programme: providing access to finance for firms that have recently restructured, which generally have greater difficulties obtaining bank credit.
This new instrument provides for not only direct support for fixed capital investment relating to the development of projects aimed at business recovery, but also support for working capital requirements resulting from the development of such projects.
The agreement was signed today in Porto by EIB Vice-President Emma Navarro and IFD Executive Board Member Henrique Cruz in an event attended by the Portuguese Minister of the Economy, Pedro Siza Vieira. This is the second operation between the EU bank and IFD. The EIB support will allow the Portuguese promotional bank to provide financing on advantageous financial terms, namely low interest rates and long tenors.
At the signing event held in Porto, EIB Vice-President Emma Navarro stated: “Small and medium-sized companies are key to promoting economic growth and job creation in Portugal. With this loan, the EIB is supporting Portuguese SMEs that have undergone a successful restructuring process and are now seeking finance for their modernisation projects while at the same time fostering innovation.We are also delighted to strengthen our collaboration with IFD. National promotional banks are key EIB partners throughout the European Union and perform a very important role in the economy.”
The Portuguese Minister of the Economy, Pedro Siza Vieira, said that “it is essential to support firms that have gone through the difficult process of restructuring. This credit line will be an instrument directed at companies that have completed this stage, pumping funds into them to make them more competitive and thus able to begin this new phase of their life with greater strength and confidence”.
In 2017, the EIB Group provided EUR 29.6bn for small businesses, reaching 285,800 companies throughout Europe. In Portugal, also last year, the EIB Group signed loan or guarantee agreements totalling EUR 1.906bn, including EUR 1.022bn that contributed to supporting more than 6,600 Portuguese SMEs. More information about the EIB’s activity in Portugal can be found here.
The EIB will grant a EUR 100 million loan to Instituição Financeira de Desenvolvimento (IFD) under an established credit line in the total amount of EUR 250 million. The agreement is the first one between the EU bank and the Portuguese national promotional institution and it will allow IFD to provide credit lines to the national banking system with advantageous financial conditions, both in terms of low interest rates and long tenors, to support investment projects of Portuguese companies.
Portuguese municipalities and municipal companies will be able to take advantage of the financing provided by the EIB to foster employment and economic growth. The bank of the European Union has provided a EUR 750 million loan aimed at supporting selected investments defined under the Portugal 2020 Partnership Agreement.
The EIB and Instituição Financeira de Desenvolvimento (IFD) have today taken a new step towards deepening the cooperation between the two institutions, through the European Investment Advisory Hub (EIAH or Hub). EIB Vice-President Emma Navarro and IFD Chief Executive Officer Henrique Cruz have signed a Memorandum of Understanding (MoU) aimed at promoting the support available through the Hub in Portugal.