- The EIB Group and contributing Member States have approved €16 billion in financing to date, equalling about two thirds of the total size of the European Guarantee Fund (EGF).
- The €24.4 billion fund, a key part of the EU recovery package to get the economy back on track, is expected to mobilise up to €200 billion in support of European businesses.
- By the end of June, the EIB and EIF signed €8.4 billion worth of projects, including the first projects under the EGF venture capital window with companies in Finland, Lithuania and Spain.
The European Guarantee Fund, which started operations in December 2020, has reached €16 billion in approved financing at the end of June. This represents over 65% of the available € 24.4 billion in EU Member States’ guarantees to support financing to European businesses struggling after the economic downturn. Total signatures with beneficiaries of financing under the EGF stood at €8.4 billion, mostly benefitting SMEs.
The pan-European guarantee fund, part of the €540 billion EU recovery package approved in 2020, is expected to mobilise up to €200 billion for EU businesses and the wider economy.
EIB Vice-President Ambroise Fayolle, who has taken over as Chairman of the EGF Contributors’ Committee, stated: “The EGF is there to support EU companies and provide the financing they need to grow their way out of the pandemic. As a Group, the EIB and EIF are firmly on track in delivering on the promises of this recovery initiative, to mobilise up to €200 billion of financing in one year. Now, halfway through the year, we have already approved 65% of the target size of the guarantee fund, and the money is reaching the real economy.”
Demand for EGF financing remains strong for both loan guarantees and venture capital, and EGF agreements have been signed in all 22 participating EU countries. Sizeable transactions were signed recently in Italy, Finland and France, keeping the EGF on track to mobilise investments worth up to 8 times the fund’s size of €24.4 billion by the end of 2021. The initiative is expected to reach three-quarters of its target by early autumn.
The first venture capital deals were signed in Spain, Lithuania and Belgium. Some 7% of EGF is aimed at financing venture capital projects.
“Although economies around the EU are starting to recover, a lot of financing will still be needed along the way, and the EIB Group is there to make this available,” said European Investment Fund Chief Executive Alain Godard. “We have been working flat-out for months now to get this financing to the markets as swiftly as possible.”
“Today we can say that the initiative we came up with at the start of the pandemic is really working,” Godard added, “thanks also to the unrelenting support of the participating Member States. They are helping us make much needed support available to small and medium companies around Europe.”
The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion boost those parts of the EU economy that have been hit the worst. Its goal is to ensure that SMEs with sustainable business plans can get the liquidity to overcome COVID-19 related adversities, and that healthy business can get the support they need, in order to grow.