BPI LRS ENHANCED SUPPORT FOR MIDCAPS

Promoter – Financial Intermediary

BANCO BPI SA

Location

• Portugal

Description

The transaction consists in a linked risk-sharing guarantee (own-resources; full delegation) to support mid-caps in Portugal across all eligible sectors.

Additionality and Impact

The proposed transaction consists of a fully-delegated linked risk sharing guarantee between the EIB and Banco BPI ("BPI"), a financially solid promoter and repeat counterpart of the EIB. The operation will enable BPI to finance small and medium-sized investment projects in eligible sectors carried out by Mid-Caps enterprises operating mostly in Portugal.

The guarantee aims to promote and accelerate private sector investments as well as facilitating access to finance for Mid-Caps, a backbone, together with SMEs, in terms of growth and employment for the Portuguese economy. The operation will help addressing the working capital, liquidity needs and investment constrains of Mid-Caps, which have been exacerbated by supply chain constraints, inflation and raising interest rates among others. The economic impacts in the economy have been widespread as value chains have been disrupted and consumer demand has slowed down due to the high inflation rates. SMEs and Mid-Caps are facing financial stress and bankruptcies and, without continuing to address their investment needs, the adverse economic effect of the pandemic could be long-lasting also considering the recent war in Ukraine and the additional challenges for SMEs and Mid-Caps in the form of increased input costs, which cannot be fully passed to end customers, thus creating pressure on margins.

Objectives

The aim is to ensure that target beneficiaries continue to have the much needed liquidity to operate. As such, the operation fills a market gap since many mid-caps face many constrains in accessing finance due to economic uncertainty exacerbated by inflation, supply chain disruptions, energy insecurity and the pandemic consequences. The EIB guarantee provides capital relief and risk protection to the financial intermediary (Banco BPI) and benefit the eligible beneficiaries (mid-caps) from competitive and flexible financing conditions, impacting higher investment, employment growth, innovation and thus the resilience of the economy. Additionally, it contributes to the EIB transversal Cohesion objective, estimating that 64% of the beneficiaries will be located in cohesion priority regions.

Sector(s)

• Credit lines - Credit lines

Proposed EIB finance (Approximate amount)

EUR 100 million

Total cost (Approximate amount)

EUR 280 million

Environmental aspects

The EIB will require that projects financed under this operation comply with EU applicable legislation, as appropriate and where applicable.

Procurement

The EIB will require that projects financed under this operation comply with EU applicable legislation, as appropriate and where applicable.

Status

Signed - 27/12/2024