EUROPEAN INVESTMENT BANK
SB/07/15
15 December 2015
Document 08-2015 Final
FOR DECISION
E U R O P E A N F U N D F O R S T R A T E G I C
I N V E S T M E N T S S T E E R I N G B O A R D
EFSI STRATEGIC ORIENTATION
Joint proposal by EC and EIB
STRATEGIC ORIENTATION OF EFSI
1
INTRODUCTION
After two decades of decline in competitiveness and subdued investment resulting
from the economic crisis1, the Commission together with the EIB launched in
November 2014 the Investment Plan for Europe (IPE), a comprehensive strategy
designed to remove obstacles to and foster investments in the Union.
The European Fund for Strategic Investments (EFSI) is a key component of the
Investment Plan and its ultimate goal is to catalyse investment, in particular private
investment, and to increase access to financing for companies, thus reducing
investment gaps in the Union. This, in turn, will help boost growth, competitiveness
and economic recovery.
Besides mobilising finance for investment through EFSI, the Investment Plan for
Europe consists of measures to help finance reach the real economy, including an
enhanced cooperation between the EIB, the Commission and Member States on
project identification (European Investment Project Portal) and stepped-up technical
assistance / advisory (European Investment Advisory Hub).
Moreover, the Plan aims to improve the investment environment by providing greater
regulatory predictability at all levels; by addressing issues related to access to
finance; and by removing barriers to investment. At the level of the Union, the
Commission has already proposed numerous actions, including the Capital Markets
Union, the Energy Union, the Digital Single Market, the Single Market Strategy and
the Better Regulation Package. As regards national level, the identification of key
obstacles to investment will be a priority of the 2016 European Semester.
The general objectives of EFSI and its implementing rules are defined in the EFSI
Regulation2 and in the Management Agreement ("EFSI Agreement") established
between the Commission and the EIB. The present document aims at providing the
strategic orientation of EFSI, which should be fully aligned with both the political
orientation of the Commission and the requirements of the EFSI Regulation.
2
SCOPE OF THE STRATEGIC ORIENTATION OF EFSI
Article 7(2) of the EFSI Regulation calls for EFSI to be governed by a Steering
Board, which, for the purpose of the use of the EU Guarantee, is to determine, in
conformity with the general objectives set out in Article 9(2) of the EFSI Regulation
the Strategic Orientation of the EFSI, including the allocation of the EU Guarantee
1
Nominal investment levels are currently 15% lower than in 2007.
Regulation (EU) 2015/1017 of the European Parliament and of the Council of 25 June 2015 on the
European Fund for Strategic Investments, the European Investment Advisory Hub and the European
Investment Project Portal and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013 –
the European Fund for Strategic Investments (OJ L 169, 1.7.2015, p. 1).
2
2
within the infrastructure and innovation windows and any decision to be taken under
Article 11(3)3 and Section 7(b) of Annex II of the EFSI Regulation4.
The boundaries for the Strategic Orientation of the Infrastructure and Innovation
Window (IIW) and the SME Window (SMEW) are broadly determined by the
following key reference documents:




EFSI Regulation, in particular Articles relating to Additionality (Art. 5),
Eligibility criteria (Art. 6), Requirements for use of EU Guarantee / General
objectives (Art. 9(2)), Eligible instruments (Art. 10)5
EFSI Investment Guidelines (Annex II of the EFSI Regulation), further
outlining for the IIW eligible counterparts, project types and instruments;
general principles related to additionality; risk profile of investment windows
and debt / equity sub-windows; exposure limits and sectoral / geographical
diversification
EFSI Scoreboard of indicators for application of the EU Guarantee for the
IIW (Delegated Regulation supplementing the EFSI Regulation6) composed of
four pillars assessed individually and covering: contribution to EFSI policy
objectives; quality and soundness of the project; technical and financial
contribution; and complementary indicators
EFSI Agreement, in particular Articles on Windows, Products, Eligibility,
Additionality and Complementarity (Part D); and Key Performance (KPI) /
Monitoring Indicators (KMI) (Schedule II)
This multiplicity and breadth of goals set for EFSI require that the EFSI Strategic
Orientation be defined at an early stage. This document focusses on two critical sets
of issues in this respect: (i) the balance and diversification of the EFSI portfolio, also
in view of risk management, and (ii) the practical implementation of EFSI and focus
of the EIB's origination capacity.
It aims at guiding decision-making during the initial investment period of EFSI. It may
be reviewed by the Steering Board in light of new policy developments also taking
into account the experience acquired during the initial stages of implementation.
While the EFSI portfolio may initially have higher levels of geographical and sector
concentration and rely to a stronger extent on existing clients and products, EFSI
shall be an opportunity for EIB to significantly increase its Special Activity financing
and venture into activities which it would not have entered in to that extent in the
absence of the EU Guarantee by engaging with new clients, implementing new
products and exploring new market areas. EIB and EIF should ensure a coherent
approach across the EFSI financing windows with a view to mobilise additional
3
Upwards adjustment of the initial limit for full guarantee on funding or guarantees provided by EIB to
the EIF.
4
EFSI Investment Guidelines - Exposure limits for EFSI: Steering Board to receive detailed overview
of risk limits, supervise development of risk portfolio and adopt appropriate measures if deemed
necessary.
5
RCR operations reported under the SMEW fall out of the scope of the provisions relating to the EU
Guarantee coverage – see section 6.2 below.
6
Commission Delegated Regulation (EU) 2015/1558 of 22 July 2015 supplementing Regulation (EU)
2015/1017 of the European Parliament and of the Council by establishment of a scoreboard of
indicators for the application of the EU guarantee (OJ L 244, 19.9.2015, p. 20).
3
investment, in the meaning of Article 5 of the EFSI Regulation and to maximise
where possible the mobilisation of private sector capital.
EFSI aims to act as a catalyst – and not substitute – for finance provided by other
actors, such as private market operators or NPBs, by addressing market failures so
as to ensure the most effective and strategic use of public money. This is reflected in
the Key Performance Indicator measuring the amount of private finance mobilised or
the Key Monitoring Indicator tracking the co-financing with NPBs.
The Strategic Orientation is complemented by several other papers foreseen in the
EFSI Regulation and the EFSI Agreement, covering specific aspects such as the
methodologies for calculation of multipliers and KPIs/KMIs, or policies and rules for
cooperation with National Promotional Banks (NPBs) and Investment Platforms.
3
GENERAL STRATEGY BACKGROUND
Economic rationale of EFSI
EFSI aims at mobilising at least EUR 315 bn of total investments over a period of
three years to boost investment in the identified areas that are important for restoring
EU competitiveness and increasing employment. EFSI aims at addressing structural
investment needs, improving investor confidence and helping to compensate for
constrained risk-bearing capacity and fragmentation.
More specifically, EFSI should catalyse new investment in projects, which implement
strategic, transformative and productive investments with high economic,
environmental and societal added value7. The EFSI Regulation (Article 9(2))
specifies, in particular for the IIW, the types of projects and sectors considered most
critical to boost investment in Europe. Projects of common interest seeking to
complete the internal market, projects of common interest in urban and rural
development, social fields, and in the environmental and natural resources fields are
singled out. So are projects strengthening the Union’s scientific and technological
base, including the development of key enabling technologies. These types of
projects are concentrated in a number of priority sectors, which are identified as
eligible for EFSI support in the EFSI Regulation. Furthermore, EFSI foresees a
particular focus on improving the access to finance for small- and medium-sized
enterprises and mid-cap companies, which are the focus of the SMEW.
Like all EIB activity, it seeks to support projects based on their economic soundness
and long-term impact. The focus lies on the economic rationale for the individual
project and on to what extent the project addresses market failures and supports the
long-term competitiveness of the Union.
Against this background, the EFSI should promote the Union’s long term growth
potential, while helping on reducing regional disparities.
7
As confirmed by the Cost-Benefit Analysis undertaken in line with Union standards (see e.g. recent CBA Guide
for Cohesion Policy http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf)
4
For the assessment of the impact of investments triggered by EFSI, employment is
an important Key Monitoring Indicator. As part of the project appraisal, the EIB will
systematically forecast the employment impact which forms part of the Scoreboard
pillar 2. Moreover, indicators specific to unemployment in the country where the
project is located also form part of the Scoreboard pillar 4 – complementary
indicators. Therefore, this information is taken into account in the decision on the
use of the EU Guarantee under the IIW
Furthermore, the aggregated overall impact of EFSI-supported activity on
employment will be assessed and subject of regular reporting and evaluation.
Investment impact
The most prominent Key Performance Indicator for EFSI will be the investment
impact. The overall target of investment mobilised through financing under EFSI is
EUR 315 bn, of which EUR 240 bn would be associated with the IIW delivered by
EIB and EUR 75 bn would be associated with the SMEW delivered by EIF.
This target is to be delivered on the basis of an overall capital contribution under
EFSI from the EU and the EIB of EUR 21 bn, representing a target global multiplier
effect of 15. The Regulation and the EFSI Agreement ensure that EIB has an
obligation to make the most efficient and effective use of the underlying First Loss
Piece (FLP).
The EFSI Regulation entered into force on 4 July 2015. The target of EUR 315 bn of
investments is linked to operations signed or entered into force within the first three
years from this date (i.e. by 04/07/2018). The initial investment period of EFSI is 4
years in terms of approvals and 5 years in terms of signatures. The Strategic
Orientation related to the investment impact covers the complete initial investment
period.
Expressing the Key Performance Indicator in terms of total investment impact rather
than EIB and EIF financing volumes represents a substantially different approach to
their usual practice (e.g under the respective Corporate Operational Plans). This
new approach provides in particular the EIB with higher risk taking capacity and also
more flexibility with regard to the choice of the optimal product for specific situations,
in line with the EIB’s business model and credit risk policy guidelines. However, in
certain cases the contribution to EFSI objectives through the EIB intervention and its
catalytic effect could be optimised through an increase in EIB’s financing stake in the
transaction.
5
4
GEOGRAPHICAL DIVERSIFICATION AND GEOGRAPHICAL
CONCENTRATION LIMITS
In accordance with the EFSI Regulation, EIB’s instruments (loans, guarantees etc.)
shall be granted for the benefit of operations carried out in the Union, or involve
entities located or established in one or more Member States and extend to one or
more third countries8. The detailed question of what types of project involving thirdcountries fall within the category of operations extending to third countries will need
to be analysed further and will be the subject of guidance to be developed through
the Steering Board.
In addition to the political rationale for ensuring broad geographical and sectoral (see
section 5) coverage, avoiding risk concentration of a portfolio is justified from a
financial management perspective. Risk diversification allows to decrease the risk of
a portfolio of assets and hence the leverage that could be achieved with a defined
level of EU Guarantee.
Avoiding excessive geographic concentration of IIW
The EFSI Investment Guidelines provide that best efforts shall be made to ensure
that at the end of the initial investment period a wide range of sectors and regions
will be covered and excessive sectoral or geographical concentration is avoided.
The EFSI Investment Guidelines require the Steering Board to adopt indicative
geographical diversification and concentration limits and guidelines applicable to the
IIW. These limits and guidelines are established as follows:
1. In order to avoid EFSI-supported operations from being concentrated in any
specific territory:
i.
At the end of the investment period, the EFSI should aim to cover all 28
EU Member States;
ii.
At the end of the investment period, the share of investment in any
three Member States together (measured by signed loan/investment
amounts) should not exceed 45% of the total EFSI portfolio.
2. While the decision to support an operation should be based on the quality of
the operation itself, the macro-economic environment where the project is
taking place is also considered. To that end, EIB should pay particular
attention to the complementary indicators defined in pillar 4 of the
Scoreboard.
3. The indicative limits outlined above complement the principles expressed
through the EFSI Agreement and the Scoreboard, including consistency with
Union policies and EFSI objectives, quality of the operation, as well as the
economic and technical viability of the operation.
8
Falling within the scope of the European Neighbourhood Policy, including the Strategic Partnership,
the enlargement policy, the European Economic Area or the European Free Trade Association, or to
an overseas country or territory as set out in Annex II to the TFEU, whether or not there is a partner in
those third countries or overseas countries or territories.
6
Avoiding excessive geographic concentration of SMEW
The EIF will aim for the SMEW at reaching all the EU Member States and also at
achieving a satisfactory geographical diversification among them.
Reporting, monitoring and follow-up
The geographical distribution of EFSI will be subject to the regular semi-annual
reports, providing breakdowns by country and by region. The Steering Board will
monitor closely the balanced progress in respecting the indicative limits and
guidelines set out above.
In case the implementation progress gives reason to assume that the indicative
limits and guidelines might not be met at the end of the initial investment period, the
Steering Board shall review the progress of the overall portfolio, analyse possible
existing market failures which are not yet addressed by EFSI investments and
related reasons, and prepare recommendations for specific actions to be taken by
EIB to help develop the project pipeline, including with the support of the EIAH, or
step up communication activities, or take other appropriate action.
If appropriately justified, the Steering Board may decide to modify the indicative
limits following consultation of the Investment Committee and written explanation to
the European Parliament and Council.
5
SECTORAL DIVERSIFICATION AND CONCENTRATION LIMITS
According to the Investment Guidelines, in order to manage sector diversification
and concentration of the EFSI portfolio, the Steering Board shall set indicative
concentration limits for the IIW in respect of the volume of operations supported by
the EU Guarantee at the end of the initial investment period. The indicative
concentration limits shall be made public. The Steering Board may modify these
indicative limits, following consultation of the Investment Committee and written
explanation to the European Parliament and the Council.
The EFSI Regulation (Article 9(2)) contains the general objectives of EFSI which
correspond to the eligible sectors /areas for EFSI guaranteed operations. The EIB
classifies each operation in the eligible sectors/areas in a mutually exclusive
manner9. The sectors/areas are:
a) Research, development and innovation
b) Development of the energy sector in accordance with the Energy Union
priorities
c) Development of transport infrastructures, and equipment and innovative
technologies for transport
9
In addition, each operation, for reporting purposes, is classified using the Statistical Classification of
Economic Activities in the European Community (NACE). For the purposes of setting sector
concentration limits for EFSI, using the 7 sectors/areas defined by the EFSI policy objectives under
Article 9.2 of the Regulation are considered to be more suitable than the 21 sectors on NACE level 1,
which are comprehensive but cover also activities that are not EFSI relevant.
7
d) Financial support through the EIF and the EIB to entities having up to 3 000
employees
e) Development and deployment of information and communication technologies
f) Environment and resource efficiency
g) Human capital, culture and health
In order to provide broad-based support to investment activity, excessive
concentration of EFSI operations in any particular sector or sub-sector is to be
avoided. At the same time, too rigid limits on sector exposures may also be counterproductive as they would not respect market needs, might compromise the quality of
operations, and would not allow for a broad portfolio diversification and hence would
not allow for effective risk management.
The definition of indicative orientations by sector and sub-sector and their monitoring
over time aims at managing these trade-offs. Against this background, an indicative
concentration limit of 30% of the IIW portfolio of signed operations in any one sector,
as defined in the sector classification of Article 9(2) of the Regulation, is deemed
appropriate. This concentration limit applies at the end of the initial investment
period, whereas the EFSI IIW portfolio may initially have higher levels of
concentration.
Reporting, monitoring and follow-up
The sectoral distribution of EFSI will be subject to the regular semi-annual reports,
providing breakdowns by sectors/areas as defined above. The Steering Board will
monitor closely the balanced progress in respecting the indicative limits and
guidelines set out above.
In case the implementation progress gives reason to assume that the indicative
limits and guidelines might not be met at the end of the initial investment period, the
Steering Board shall review the progress of the overall portfolio, analyse possible
existing market failures which are not yet addressed by EFSI investments and
related reasons, and prepare recommendations for specific actions to be taken by
EIB to help develop the project pipeline, including with the support of the EIAH, or
step up communication activities, or take other appropriate action.
If appropriately justified, the Steering Board may decide to modify the indicative
limits following consultation of the Investment Committee and written explanation to
the European Parliament and Council.
6
PRODUCTS AND COUNTERPARTS
The increased risk bearing capacity through the EU Guarantee enables EIB and the
EIF to explore new market areas, new client types and additional ways to engage
with existing client types.
6.1 Under the IIW
The EFSI operations under the IIW will generally fall under EIB’s Special Activities
risk category. In general terms, opportunities are being explored within seven
8
broadly defined categories, as follows: (i) Corporate Junior (or Subordinated) Debt,
(ii) Corporate Senior Debt, (iii) Project Finance Junior (Subordinated) Debt, (iv)
Project Finance Senior Debt, (v) Risk sharing with Financial Intermediary
(FI)/Investor, (vi) Equity-type risk ‘individual’ operations and (vii) Equity-type risk
‘portfolio’ operations.
EFSI operations shall be structured in order to maximise, where possible, the
mobilisation of private sector capital. The EFSI Investment Guidelines underline in
section 2(b) that the EU Guarantee shall be granted to support directly or indirectly
the financing of new operations. Refinancing operations can only be supported on
an exceptional and well justified basis under specific conditions outlined in the EFSI
Investment Guidelines. The EU Guarantee cannot be used to include retroactively
into the EFSI portfolio signed EIB operations10.
During the first half of 2016, with a view to better communicate the products offered
under EFSI, the EIB will publish on its website a list of potential products offered
using the EU guarantee, for example a repository of product sheets, building on –
but not limited to - the information already existing on its website.
Moreover, the Commission in cooperation with the EIB issued a document providing
guidance on the combined use of European Structural and Investment Funds with
EIB financing under the EU guarantee so as to allow for an appropriate level of
coordination, complementarity and synergy.
Figure 1: Simple overview / examples of product types and counterparts
10
During the transitional phase as referred to in Article 24 of the EFSI Regulation, the EU Guarantee
under EFSI may however be granted by the Commission to specific operations approved by the EIB
and the EIF after 1 January 2015, including if already signed.
9
Opportunities to fund projects with public sector counterparts are also explored.
These may comprise projects with private sector co-financing or, ultimately, projects
where the residual financing is provided by the public sector, should it be established
that private financing be unavailable.
Financing through intermediaries
General considerations
An important portion of the financing envisaged to be provided under EFSI IIW will
be through intermediaries, in particular funds and financial institutions.
The IIW equity sub-window will be key for the EFSI implementation in particular in
terms of multiplier impact. The EIB will deliver under this sub-window through
essentially three pillars: (i) direct equity type operations, (ii) infrastructure and other
funds, and (iii) co-investment with infrastructure and other funds.
There are some limitations on the EIB intervention through intermediary funds or
financial institutions under the equity/equity type sub-window. The resources
dedicated to the equity sub-window are limited (EUR 5 billion fully allocated upfront
by the EU and the EIB, 50/50 pari passu), given the high capital consumption of
such type of intervention. However, this sub-window shall only be used for
operations with an equity type risk profile. Risk sharing / guaranteed debt operations
with NPBs or FIs typically carry a debt type risk and hence will in most cases not
qualify for the equity sub-window.
Under the EFSI IIW debt sub-window as currently contemplated, EIB faces strict
constraints. This is because EIB, although not subject to banking supervision
regulation, is applying the Advanced IRB approach under CRD/CRR to ensure
compliance with best banking practice as required by its Statute. The EU Guarantee
consists of a First Loss Piece (FLP) protection on a portfolio of debt operations,
resulting in a synthetic securitisation of this portfolio. For Capital Adequacy Ratio
(CAD) purposes, EIB will apply the Supervisory Formula Approach (SFA) of the
Basel III framework for securitisation structures. In practical terms, this means that
each underlying asset benefiting from EU Guarantee under the EFSI IIW debt subwindow needs to be rated internally by EIB (based on a validated model).
EIB has validated internal rating models for its common products, including the direct
support to corporates, banks, and project finance. These internal rating models are
used for risk-sharing operations with partial delegation. Nevertheless, for risk sharing
debt operations with full delegation to other institutions (which therefore are not rated
internally by the EIB), the IIW debt sub-window, which according to the SFA requires
full EIB rating for each underlying operations, cannot be used.
Risk sharing structures under the debt window
Within this general framework, a product currently being implemented on a pilot
basis under the debt window is risk sharing structures in cooperation with NPBs or
FIs under a partial delegation model.
10
Such risk sharing operations can be structured as directly granted on the new loans
originated by a NPB or a FI. These loans are directly and immediately guaranteed by
the EIB at a guarantee rate of e.g. 50%.
Risk sharing operations may also be structured as “delinked” such that EIB
guarantees an existing identified portfolio of performing (at the time of the signature
of EIB transaction) loans from a NPB or a FI with a ‘guarantee rate’ of maximum
50%11. Thanks to the guarantee, the FI commits to building up a portfolio of new
loans (not guaranteed). In this structure, regulatory capital of the FI would normally
be released on the guaranteed portfolio in order to support the origination of the new
portfolio and pass-on benefits to final beneficiaries. The guarantee rate (applied to
the existing loans) will start at zero and increase proportionally with the build-up of
the new portfolio which will include signed loans fully eligible under EFSI (to be
originated during a defined timeframe12). Hence, if no new loans are granted, the
guarantee rate will remain at zero. The projects originated by the FI under the new
portfolio will need to fulfil the EFSI requirements in terms of additionality and other
eligibility criteria in order to be included in the EFSI portfolio. The EIB will ensure that
the existing portfolio will only include operations with borrowers incorporated in the
EU and exclude operations with borrowers that belong to EIB excluded sectors.
The regulatory capital of the FI will normally be released on the guaranteed existing
portfolio in order to support the new loans. This is the example of a simple structure
that allows for efficient risk management in order to increase new lending by the FI.
11
Under the delinked product, loans are guaranteed on an individual or portfolio basis. The delinked
product will be available to banks, including those under ongoing restructuring with a restructuring
plan approved by Commission decision. It will not be available to:
- Banks with a capital shortfall at the time of the signature of the EIB transaction based on EIB due
diligence or supervisory public announcements. If a capital shortfall occurs during the defined timeframe for allocation of new loans, the EIB guarantee will not allow for additional loans to be added
(i.e. the guarantee rate is frozen).
- Banks in liquidation, wind-down or resolution.
- Cover non-performing loans. Exceptionally, the de-linked product could be available if it is done at
market price, at least on a pari-passu basis with the private sector participating at least with the same
amount and to the extent that new EFSI eligible loans are signed.
12
If the guarantee rate has not reached the maximum target of 50% at the end of the defined
timeframe, the “unused portion” of the guarantee will be released unless the agreement between the
EIB and the FI is amended to extend the investment timeframe, which in any case will not span
beyond the end of the initial investment period of EFSI.
11
Figure 2: Simple overview / examples of product types and counterparts
The EU Guarantee will support EIB interventions in investment platforms including
debt funds only to the extent that the risk profile of the portfolio of the underlying
assets (taking into account possible credit protection provided by other parties
including EU instruments), would carry a risk in line with the definition of additionality
as defined in Article 5 of the EFSI Regulation.
The creation of a new “hybrid” sub-window ring-fenced from the main EFSI
IIW debt compartment
To allow the transparent lending to entities that cannot be internally rated with a
validated model, it is currently envisaged to create a “hybrid” debt sub-window ringfenced from the main EFSI debt compartment. This sub-compartment would be kept
structurally separate from the EFSI IIW - the regulatory capital requirement for this
new window would not be calculated under the supervisory formula approach - and
could support lending by EIB which, capital-wise, would hence be treated alike
equity risk.
It is proposed that EUR 1bn from the EUR 11bln FLP dedicated to the EFSI IIW
debt sub-window would be transferred to this hybrid compartment aiming at an
internal multiplier of at least 3 times through an EIB contribution. Such debt subwindow managed inside EIB and could accommodate important operations such as
risk sharing with full delegation to NPBs and/or loans to funds, and / or any loans to
entities that do not fit the current requirements of EIB’s risk models (i.e. for which
the EIB has not yet developed validated risk models and hence cannot apply the
Advanced Rating Methodology under Basel rules 13). The projects supported by
NPBs or funds will comply with the eligibility and additionality criteria set out in the
EFSI Regulation.
13
These investments would require full capital allocation until such validated model is in place.
12
6.2 Under the SMEW
The EFSI SME Window will consist of up to EUR 2.5 bn provided by the EIB under
its own risk (to increase the Risk Capital Resources (“RCR”) mandate) and up to
EUR 2.5 bn provided by EIB under EFSI (i.e. backed by the EU Guarantee) to
support a number of products to be implemented through the EIF. The SMEW
products benefitting of the EU Guarantee coverage shall be approved by the EFSI
Steering Board and the Managing Director after consultation with the EFSI
Investment Committee14.
The first phase of the deployment of the EFSI SMEW consists of:
a) making available in 2015 the 2016-2020 investment capacity of InnovFin
SMEG and of COSME LGF (EUR 1.25 bn)15; and
b) increasing the RCR mandate by EUR 2.5 bn (from EUR 7 to EUR 9.5 bn) to
further support SMEs' and Mid-Caps' access to finance in the form of equity.
The investment and guarantee scope foreseen under InnovFin SMEG and COSME
LGF are within EIF's core policy to support EU-28 SMEs by improving their access
to finance through a wide range of selected financial intermediaries. Such
enhancement of InnovFin SMEG and COSME LGF, ensuring speeding-up and
additional financing made available to EU policy areas in a period of market failures
would not be possible without the EU Guarantee under EFSI.
The RCR has become the core pillar of EIF's equity activity as mapped out in EIF's
equity strategy, and its increase is important for EIB Group's visibility and perceived
support for the European private equity market especially in the context of the IPE.
With a view to further encourage the mobilisation of private capital, other phases of
the SME Window are expected to consist of the following products under the EU
Guarantee coverage (figures subject to changes):
-
-
EUR 1.27 bn from EFSI for equity instruments of a total size of some 2 bn
(including H2020 contributions); these will be rolled out through a platform
including EIB Group contribution and possibly involving NPBs that provide
additional matching funds and will focus on final beneficiaries in the early to
the growth/expansion stages; specific policy guidelines will be defined for the
equity platform;
EUR 0.15 bn from EFSI for a EUR 1 billion (including H2020 and EIF
contributions) uncapped guarantee for riskier loans to innovative SMEs and
small mid-caps,
EUR 0.1 bn from EFSI for securitisation as part of a securitisation platform
involving the EIB, EIF and NPBs with additional contributions - currently under
discussion – in the order of some 1.5 bn.
14
Under the SMEW, individual operations are subject to approval by EIF’s internal governance.
Formal approval of this products will be sought from EFSI’s Steering Board and Managing Director
(after consultation of the Investment Committee) once the EFSI governance will be in place. In the
interim, EU Guarantee coverage for SMEW operations is provided by ad hoc decisions of the
Commission.
15
13
Further products may be developed subject to the provisions of the EFSI Regulation.
6.3 National Promotional Banks / Institutions (NPBs) / Investment Platforms
The policy and more detailed rules applicable to the operations with Investment
Platforms and NPBs shall be established in a separate document, to be adopted by
the Steering Board.
7 REVIEW OF THE STRATEGIC ORIENTATION
In line with the requirements of the Regulation, the Steering Board shall regularly
review this Strategic Orientation for EFSI. This review shall in particular be carried
out on the basis and in the context of the review of the annual report to the
Commission, prior to the finalisation of the annual report to the Council and the
European Parliament. The first review shall be done at latest by 31 July 2016.
In the context of this review, the Steering Board shall look inter alia at the
deployment of EFSI, the use of the EU Guarantee, the support to EU policy
objectives as well as geographical and sectorial concentration. In addition, it shall
supervise the evolution of the risk profile of EFSI with the view to consider
appropriate measures if necessary.
Likewise, the Steering Board may in this context review the allocation of the EU
Guarantee within the IIW and between IIW and the SMEW in accordance with Article
11(3) of the EFSI Regulation.
Finally, in order to review, on a regular basis the implementation of EFSI, the
Steering Board shall receive, on a semi-annual basis KPI / KMI monitoring reports,
including, where relevant additional monitoring information at product or sector level,
as well as detailed information aggregated at portfolio level with regard to sector and
country concentration/diversification, as well as on the overall risk profile of the
portfolio.
14