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Line-by-line guarantee agreement with IKB Deutsche Industriebank AG for up to 50% of their risk exposure. Sub-loans will finance electricity and energy infrastructure (district heating and electrical grid expansion) or public water and telecommunication infrastructure.
The operation falls under the Growth for Energy (G4E) initiative, designed to support small scale energy and related infrastructure investments at municipal level. Eligible sectors include, for example, electrical grid expansion, district heating, water infrastructure and telecommunications. Additional investment schemes may be deemed eligible and will be checked during appraisal. The operation supports IKB in expanding its lending activity to utility companies, such as the German and Austrian "Stadtwerke" which are facing significant investment challenges for the modernisation and the decarbonisation of the existing energy supply infrastructure. The risk-sharing instrument enables IKB to access capital relief and loss protection for newly originated eligible transactions and it alleviates limit restrictions on individual obligors/sectors, while offering affordable financing to eligible final beneficiaries, helping them invest in infrastructure upgrades, required for the green transition. The project will complement to IKB LRS ENHANCED SUPPORT operation for mid-caps. While the G4M allows funding to mid-caps only, the proposed operation focuses on the market gap in the energy and municipal infrastructure.
The proposed operation falls within the scope of the EIB's Environmental and Social Standards - "Standard 11 Intermediated Finance". The borrower/financial intermediary has adequate capacity, systems and processes in place for identifying, assessing, managing and monitoring environmental, climate and social (ECS) risks related to the potential sub-projects benefitting from EIB support. The final beneficiaries will be required to comply with applicable national and EU legislation in respect of environmental and social matters, as appropriate.
In accordance with the Bank's policy to ensure that sub-loans comply with the EU acquis, in particular in the fields of environment, social and public procurement, the Bank will require such intermediary institution to take all the requisite measures to ensure that the final beneficiaries undertake to implement and operate the sub-projects under the New Portfolio in line with the requirements of the applicable national legislation, provided that it is in conformity with EU rules, and the applicable EU environmental and social legislation and EU procurement rules.