The European Investment Bank signs two new operations on the day of its annual results press conference in Sofia:

- a EUR 18m loan to Software Group supported by the Juncker Plan – the EIB’s first venture debt operation in Bulgaria

- a EUR 20m loan to Raiffeisen Leasing, for investments in small and medium-sized companies

In 2018 EIB Group support in Bulgaria amounted to EUR 217m, including:

- EUR 103m of loans signed by the EIB, and

- EUR 114m committed by the EIF for eight operations, mobilising EUR 228m of investments

The loan to Software Group – a global technology company helping financial service providers digitise their business and successfully go through the process of digital transformation – is the first transaction with venture debt features in Bulgaria. The operation provides direct support to the company and is backed by a guarantee from the European Fund for Strategic Investments (EFSI), a key component of the Investment Plan for Europe. EIB financing will facilitate the execution of Software Group’s R&D strategy and strengthen its global reach.

The intermediated loan agreement with Raiffeisen Leasing Bulgaria represents the second tranche of a EUR 50m loan. It will finance projects by some 300 small and medium-sized companies, supporting at least 8,000 jobs in the country.

EIB Vice-President Vazil Hudák commented: “We had a strong showing in Bulgaria in 2018, especially with the roll-out of our advisory services, and we are continuing to support the economy in the new year with two important transactions. EIB Group financing represented some 0.4% of Bulgaria’s GDP last year, above EU average, while advisory services rendered facilitated the implementation of projects worth some EUR 2bn, confirming that the Bank has an important role to play in the country.”

Deputy Minister of Finance Marinela Petrova stated: “We welcome the EIB commitment to develop innovative financial instruments to address the investment gaps and to provide innovative, pragmatic and efficient solutions to further catalyse investment in the EU. We will rely in the future on this commitment and the ability of the EIB to work with the Bulgarian authorities and businesses on initiatives addressing the needs of our economy.

European Commissioner for Digital Economy and Society Mariya Gabriel said:” “With EUR 43bn of additional investment mobilised for the digital sector, the Juncker Plan is supporting European businesses embrace and efficiently succeed the process of digital transformation. I welcome the two new operations, especially the focus on SMEs. I call on other companies in Bulgaria and elsewhere to follow suit and seize all opportunities.”

Dobromir Dobrev, Deputy CEO of Raiffeisenbank (Bulgaria), responsible for corporate banking, capital markets and the leasing company, said: Thanks to our long partnership with the EIB we are able to provide sustainable support for the Bulgarian business. So far, the Raiffeisenbank Group in Bulgaria and the EIB have signed agreements for EUR 180 million for the bank and the leasing company. Under the new credit line from the EIB, through Raiffeisen Leasing Bulgaria, we will provide new leasing financing for a wide scope of customers for purchase of equipment, trucks and trailers, light commercial vehicles and passenger car fleets, etc. All this will support the investment plans of the Bulgarian companies and will also increase their competitiveness.”

CEO of Software Group Kalin Radev commented: We are proud to be the first company in Bulgaria that successfully completed the procedure for receiving a venture debt by EIB. The funding will support our ambitious business goals and our plan for development in the next three years. We will invest in innovations, attracting top talents, entering new business areas while continuing the steady growth of the company”

EIB Group results in Bulgaria in 2018

Support to corporates to foster strategic infrastructure

In 2018, the EIB provided a loan of EUR 14m to Agria Group Holding AD to finance the construction of a new port facility close to the Port of Varna for the storage, handling and export of grain, vegetable oils and sunflower meal in the area of Beloslav. This project contributes to the development of a comprehensive trans-European transport network node by improving the capacity and efficiency of the associated supply chain. It supports sustainable transport by promoting sea transport as an alternative to other, carbon intensive transport modes, and fosters sustainable economic growth and development of a less developed region.

Fostering the development of municipal infrastructure

The EU bank also provided two loans to Sofia Municipality:

  • EUR 22m for the construction of the second stage of Sofia Metro Line 3. This project involves a twin-track metro line 3.8 km long, four metro stations, and a railway stop for connection to the national railway network. The new metro line will increase public transport passenger capacity, encourage a modal shift towards more environmentally-friendly transport and reduce congestion on the existing transport network;
  • EUR 67m to support the construction and commissioning of a new combined heat and power plant for Sofia's district heating network operated by Toplofikacia. The new cogeneration plant is designed to process daily more than 100t of refuse-derived fuel from a mechanical biological treatment plant in Sofia.

Support for SMEs and mid-caps

Following a record-breaking year, the EIF continued to support SMEs in Bulgaria by committing a total of EUR 78m in 2018 via four new guarantee operations and one new venture capital fund aimed at providing debt and equity financing of EUR 168m in total.

Overall in 2018, through EIF operations in Bulgaria more than 3,000 small and medium-sized companies received financing worth approximately EUR 408m.

Last year, given the successful implementation of the JEREMIE Initiative, the EIF and the Bulgarian Ministry of Economy agreed to launch two new financial instruments with reflows generated from JEREMIE operations. The Documentary Finance Guarantee facility will use up to EUR 30m of reflows for new trade finance guarantees to support the internationalisation and diversification of the Bulgarian economy with a total loan volume estimated to reach EUR 200m. The InvestBG Equity programme will use JEREMIE reflows and EIF own resources to commit up to EUR 110m in venture capital and private equity funds investing in Bulgaria and direct equity co-investments in Bulgarian companies. The first operations under the Documentary Finance Guarantee facility and the InvestBG Equity programme are expected to be launched in 2019.

EIB advisory services in Bulgaria

Bulgaria is one of the largest beneficiaries of EIB’s advisory services. Since 2006 JASPERS has supported the completion of numerous Bulgarian investment projects with total project costs of over EUR 5.5bn on 30 major projects, with around EUR 3.9bn of European Commission grants mobilised.  In addition to projects already completed, JASPERS currently has 28 active advisory and capacity building assignments in Bulgaria.

In 2018, four large investment projects with JASPERS support were approved by the Commission for a total investment of EUR 1.23bn, and a grant amount of EUR 882m. JASPERS was also very active in finalising advisory support for the preparation of the Natural Gas Interconnector between Greece and Bulgaria, with total costs of around EUR 240m.

The EIB’s Project Advisory Support Unit (PASU) provides flexible and targeted project advisory support to Member States. It is financed by EU funds and aims to improve the rate and quality of absorption of European Structural and Investment Funds (ESIF) through better management, leveraging and performance of investment. In Bulgaria it focuses on project delivery and implementation support, the preparation of strategic documents and institutional capacity building.

The European Investment Advisory Hub (EIAH) is a partnership between the EIB and the European Commission, and a single point of entry to a comprehensive package of advisory and technical assistance. Until the end of 2018, the Hub processed 79 advisory requests from Bulgaria, ranging from information enquiries to requests for technical assistance, funding, or both. Of these, 65 requests were project-specific, 35 came from the private sector and 10 qualified for comprehensive advisory assistance.

In association with Financial Instruments Advisory (FIA), a specific EIAH Advisory Services Agreement was signed in August 2017 to structure and develop a Bulgarian urban investment platform. Under this framework, FIA is providing support to the Bulgarian Fund of Funds (FoF) to develop their ESIF-based urban development financial instruments (FIs). This support was provided in relation to soft market testing in the banking sector and the selection of FI managers. Agreements between the FoF and the selected FI managers were signed in September 2018, enabling the three Urban Development Funds to start operations.

InnovFin Advisory (IFA), a joint EIB-EC initiative under Horizon 2020, aims to improve project bankability and provides non-project-specific strategic studies related to access-to-finance challenges faced by RDI investments. IFA is currently providing project advisory in relation to investments in display hardware and software development worth EUR 30m, with a view to identifying suitable funding options, including debt financing or venture capital.