EIB signs a EUR 25 million ‘quasi-equity’ financing deal with podcast company Acast for R&D and international expansion
Agreement supported by Juncker Plan’s European Fund for Strategic Investments
The European Investment Bank (EIB) has signed a EUR 25 million quasi-equity financing agreement with podcast company Acast. As well as independent podcasts, Acast also looks after the audio content of larger publishers, such as the Financial Times, the Guardian, Vogue, Aftonbladet and Billboard. The EIB financing is supported by theEuropean Fund for Strategic Investments (EFSI), the main pillar of theInvestment Plan for Europe, or Juncker Plan.
Acast will use the financing to expand its research and development activities and to further develop its audio content distribution platform. The company is headquartered in Sweden and its services are available in 10 countries. A part of the project costs will go into supporting its international market expansion. The peculiarity of the‘quasi equity’ financing, which the EIB is only able to support with the backing of the Juncker Plan, is that it has the characteristics of an equity stake in the company, yet does not translate into the EIB owning shares in Acast. This type of financing addresses a market failure for non-dilutive growth capital for European businesses: providing equity without affecting the ownership of the company.
European Commission Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “The main motivation for creating the Juncker Plan was to provide alternative sources of financing to innovative companies in need of financial support that struggled to obtain a traditional bank loan, and as a result to boost jobs, growth and investment in the EU. Today’s agreement between the EIB and Acast does exactly that, and it does so using a novel form of financing. I wish the company every success with its expansion plans.”
“The EIB’s investment and support of Acast is a true milestone in our company's growth as well as in the future of the global podcasting infrastructure. Today, we are one step closer to our goal of seeking out and supporting all the audio storytellers of the world - giving their stories the audience they deserve,” said Leandro Saucedo, Chief Business Officer of Acast.
EIB Vice-President Alexander Stubb, added: “Everyone loves a good podcast, but it can be hard to make a living off of this type of infotainment. I think it’s important that a European provider for this type of service exists, which gives all voices the possibility to be heard. Acast truly serves as a one-stop-shop for listeners, creators and advertisers, and we’re happy to support the company in its expansion.”
The Investment Plan for Europe, the Juncker Plan, has played a key role in boosting jobs and growth in the EU. Investments by the EIB Group backed by the Juncker Plan’s European Fund for Strategic Investments (EFSI) have increased EU gross domestic product (GDP) by 0.9% and added 1.1 million jobs compared to the baseline scenario. By 2022, the Juncker Plan will have increased EU GDP by 1.8% and added 1.7 million jobs. These are the latest calculations by the Joint Research Centre (JRC) and the Economics Department of the EIB Group, based on financing agreements approved until the end of June 2019.
The EIB and the investment company Suomen Teollisuussijoitus Oy Tesi have agreed on a financing programme to channel funding in support of the growth of Finnish companies. The operation is guaranteed under the European Fund for Strategic Investments (EFSI), central pillar of the Investment Plan for Europe of the Juncker Commission. The financing to be managed by Tesi targets a total of EUR 100 million to promising companies, equally split between the EIB and Tesi. Furthermore, the funding is structured to be complemented by private sector co-investments with another EUR 100 m, totalling EUR 200 m of new investments to the benefit of SMEs and mid-caps.
The European Commission and the EIB Group have delivered on their pledge to mobilise EUR 315 billion in additional investment under the Investment Plan for Europe, the Juncker Plan. Backed by a budget guarantee from the European Union and own resources from the EIB Group, 898 operations have been approved, which are expected to trigger EUR 335 billion in investment across the 28 EU Member States.