European Investment Bank (EIB) signs up to €100 million co-investment facility with Finnish state-owned private equity company Tesi, in support of local SMEs hit by COVID.
Both parties will invest €50 million, mainly targeted at innovative SMEs whose growth was hampered by the pandemic and have no easy access to venture capital.
The EIB financing falls under the European Guarantee Fund, part of the €540 billion COVID-package agreed by EU Member States in spring 2020.
The European Investment Bank and Finnish state-owned private equity company Tesi have agreed a co-financing facility of €100 million, to aid Finnish SMEs finding their way out of the COVID-related economic difficulties. Both parties will invest half of the total €100 million, which will be deployed in the form of quasi equity to innovative Finnish SMEs.
EIB Vice-President Thomas Östros stated: “This facility targets companies in key strategic areas for the development of the EU's economy. COVID-19 has oftentimes reduced these companies' access to equity capital and thereby hampered their growth and innovation. With the EGF guarantee behind us, we partner once again with Tesi, to build on their experience and make sure that those SMEs have access to the finance they need.”
“I’m very pleased with our fruitful co-operation with EIB-group in building up much needed tailor-made financial tools in order to remove financial bottlenecks faced by Finnish growth companies”, added Mika Lintilä, Minister of Economic Affairs.
“We are very happy to continue our partnership with EIB with this new co-investment facility. It enables larger financing rounds, improves ability to make significant investments and channel EU equity financing to Finnish growth companies”, says CEO of Tesi Jan Sasse.
The co-investment facility will have an investment period of three years and focus on capital-intensive technology sectors such as ICT, healthcare and industrial/deep tech. All of these are key strategic areas for the development of the EU's economy, making the case for supporting their growth and innovation.
The co-investment facility will be managed by Tesi and the roll-out will happen at the beginning of 2022. The funding is structured to be complemented by minimum 50% share private sector co-investments.
In 2020, the EIB made available in excess of €676 million in loans for Finnish projects. The EIB borrows money on capital markets and lends it to projects that support EU objectives, with about 90% of all loans being granted within the European Union.
TheEuropean Guarantee Fund(EGF) was set up by the EIB Group with contributions from Finland and other 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 to boost those parts of the EU economy that have been hit the worst.
Tesi (Finnish Industry Investment Ltd) is a state-owned investment company that wants to raise Finland to the front ranks of transformative economic growth by investing in funds and directly in companies. We invest profitably and responsibly, hand-in-hand with private co-investors, to create new success stories. Our investments under management total 2.1 billion euros. www.tesi.fi | @TesiFII
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 Government of Finland, together with EC and EIB Group reaffirm their strong commitment to Finnish SMEs in these difficult times by expanding the financing available under the “SME Initiative Finland”. Following an agreement between the European Commission, the Finnish Ministry of Economic Affairs and Employment, the EIB and the EIF, an additional €350 million in SME financing at preferential terms will be made available to small Finnish businesses.
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.