This spring, an exceptionally solid foundation for growth through investments throughout Europe has been laid. In March, the European Commission, the European Investment Bank (EIB) and the European Investment Fund (EIF) signed the Guarantee Agreement on a European Union budget guarantee of 19.65 billion Euros to support investment projects under the new InvestEU Programme that was followed by the InvestEU Investment Committee’s approval of the first projects in April.
The financing backed by the EU guarantee will support investments in a sustainable recovery and public and private investment mobilisation across the European Union. With focus on sustainable infrastructure; research, innovation, and digitisation; small and medium-sized businesses; and social investment and skills, InvestEU provides the entire continent with a welcome boost towards both post-pandemic recovery as well as green and digital transitions.
Several financial instruments playing in sync
All in all, the InvestEU Programme will bring together under one roof a multitude of EU financial instruments currently available to support investment in the EU, making funding for investment projects in Europe simpler, more efficient, and more flexible.
The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub, and the InvestEU Portal. The InvestEU Fund will be implemented through financial partners who will invest in projects using the EU budget guarantee of 26.2 billion euros. The entire budgetary guarantee will back the investment projects of the implementing partners, increase their risk-bearing capacity, and thus mobilise at least 372 billion Euros in additional investment.
“Over the next 6 years, InvestEU will unlock much needed financing in support of businesses, innovation, infrastructure and the environment across Europe”, European Investment Bank Vice-President, Prof. Teresa Czerwińska, said. “By combining public funds with our expertise and risk-bearing capacity we can successfully mobilise large-scale investments, both public and private, that will support Europe in its recovery from the COVID-19 crisis and in the transition to a green and sustainable economy. We are thrilled and proud to join the European Commission and other partners in our role as the lead implementing and advisory arm of the InvestEU programme.”
Long-term funding to companies and projects
The InvestEU Programme, whose budget stems partly from Next Generation EU, is able to provide crucial support to companies in the recovery phase. At the same time, and in line with its original goals, it ensures a strong focus of investors on the EU’s medium- and long-term policy priorities such as the European Green Deal, the European Green Deal Investment Plan, and the Strategy on shaping Europe’s digital future. InvestEU also supports activities of strategic importance to the EU, in particular in view of enhanced resilience and of strengthening strategic value chains.
On the occasion of the signature of the guarantee agreement with the EIB Group, Commissioner for the Economy, Paolo Gentiloni, emphasized: “The investment needs we must address in the coming years are truly immense. And I’m very confident that InvestEU will prove to be an invaluable tool to help us face that challenge. Today we open a new chapter in the story of the European Commission’s successful partnership with the EIB Group: to build sustainable infrastructure, drive innovation, develop future-oriented skills and nurture the growth of SMEs.”
InvestEU will immediately assume a major role in supporting the European economy that has, along with the rest of the world, experienced exceptionally turbulent years. As uncertainty will, in one form or the other, shadow the overall economy during the upcoming years as well, tools to attract long-term funding will play an essential role in ensuring and further improving society’s development and general well-being. Building on the successful implementation of the European Fund for Strategic Investments, InvestEU has what it takes to help relaunch investments and economic growth in Europe.
European Investment Bank Group as the main financial partner
The InvestEU Fund is implemented through financial partners who will invest in projects using the EU guarantee. The main partner is the EIB Group, which has successfully implemented and managed EFSI since its launch in 2015. In addition to the EIB Group, International Financial Institutions active in Europe – such as the European Bank for Reconstruction and Development (EBRD) – and National Promotional Banks have direct access to the EU guarantee.
The EU guarantee is split 75% – 25% between the EIB Group and all other implementing partners. Opening up the possibility to benefit from the EU guarantee to other institutions is driven by the fact that there are other experienced potential financial partners in the EU, which have specific financial or sectorial expertise, deep knowledge of their local market or greater capacity to share risk with the EU in some areas. This approach enlarges and diversifies the pipeline of projects and increases the potential pool of final beneficiaries.
In order to benefit from InvestEU financing, potential projects must address market failures or investment gaps and be economically viable. In addition, they must need EU backing in order to get off the ground as well as achieve a multiplier effect and, where possible, crowd-in private investment. The project must also help meet EU policy objectives.
Cover photo: Signing the InvestEU agreement: EIB Vice-President Teresa Czerwinska, European Commissioner for Economy Paolo Gentiloni and EIB Chief Investment Officer Alessandro Tappi.
Copyright: European Commission, 7 March 2022