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The Investment Plan for Europe aims to encourage investment in order to create jobs, boost growth and competitiveness, meet long-term economic needs and strengthen the EU’s productive capacity and infrastructure. It supports investment in the real economy through the European Fund for Strategic Investments (EFSI), which enables investment in infrastructure projects and SMEs.
In the aftermath of the 2008 global economic and financial crisis, the EU suffered from low levels of investment. Collective and coordinated efforts at European level have helped to reverse this downward trend, support Europe’s economic recovery and put the EU back on the path of prosperity. Significant resources are available across the EU to support investment, which recognise that Europe’s diversity means that growth cannot be pursued by one-size-fits-all solutions.
When Jean-Claude Juncker began his mandate as President of the European Commission on 1 November 2014, he spearheaded the Investment Plan for Europe, the so-called Juncker Plan, which has three objectives:
• To remove obstacles to investment
• To provide visibility and technical assistance to investment projects
In Association with
• And to make smarter use of financial resources.
European Fund for Strategic Investments (EFSI)
The Juncker Plan is made up of three pillars: the European Fund for Strategic Investments (EFSI); the European Investment Advisory Hub and the European Investment Project Portal; and improving the business environment by removing regulatory barriers to investment both nationally and at EU level.
First, the European Fund for Strategic Investments (EFSI) provides an EU guarantee to mobilise private investment. The Commission works together with its strategic partner, the European Investment Bank Group (EIB).
EFSI enables investment in infrastructure projects and small and medium-sized enterprises. By providing a total guarantee of €33.5bn for business and infrastructure projects, the extended EFSI aims to unlock additional investment of at least €500bn by the end of 2020.
The European Investment Fund (EIF) is an EU Agency that helps to implement EFSI and is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments, which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
The EFSI is effectively an EU budget guarantee. This allows the European Investment Fund to:
• Finance operations that are riskier than their average investment
• Support highly innovative projects
• Provide risk financing to small companies without a credit history
• Finance a greater quantity of projects and SME agreements than would have been possible without the EU budget guarantee’s backing.
EFSI/EIF financing is channelled through financial, credit institutions, loan funds, and guarantee institutions operating in the EU member states. SMEs and small mid-caps seeking finance are directed to EIF financial intermediaries: in Ireland these include AIB; Bank of Ireland; Strategic Banking Corporation of Ireland; and Microfinance Ireland.
The EIF’s venture capital investments in Ireland include ACT Venture Capital, University Bridge Fund, MML Growth Capital Partners and Fountain Healthcare Partners. Final approval for funding lies solely with the financial intermediary.
Case Studies
Thanks to EIF's financial intermediaries, thousands of SMEs and entrepreneurs across Europe have been able to start up and expand their businesses. Examples in Ireland include Worldnet, which in 2017 sourced funding from ACT Venture Capital with capital supplied from the European Investment Fund. Worldnet is a leading B2B provider of omni-channel payment platform solutions, with an international clientele that stretches across Europe and North America. “At the time we didn’t have a business entity in the US,” explains Will Byrne, CEO and co-founder of Worldnet. “We’ve since been able to establish ourselves on the US market, develop product capabilities and exploit our business model to the fullest extent, hiring around 15 people in the process. All the R&D still takes place in Dublin and the vast majority of our staff is based here.”
SilverCloud Health is another ACT Venture Capital Client whose funding was indirectly sourced from the EIF. In late 2016, SilverCloud received an equity investment from ACT that allowed the firm to scale up
its activity. According to CFO Kevin Higgins: “We set up an office in the US – a sales team with a physical base. It really breathed new life into the business, allowing us to expand the business significantly and double our staff numbers. Without it, our ticket size would have inevitably been smaller and everything would have been moving at a much slower pace.”
Roomex in Dublin took advantage of loan finance in 2017 to improve its global hotel-booking platform for corporate clients. In order to continue improving the product and scale-up the business, Roomex secured
financial support in the form of a loan from the Bank of Ireland, backed by a European Investment Fund guarantee. “This was by far the best option for us, as a fast-growing company”, says founding director Jack Donaghy. With the financing, the company established an extensive roadmap for product development.
An estimated 950,000 smaller companies across Europe are expected to benefit from EFSI SME investments. These figures underlinethe added value that the EFSI brings to the EU’s economy, both now and in the years to come.
Supporting Project Promoters
Beyond mobilising significant investments, the Juncker Plan also supports project promoters and helps to develop a pipeline of quality projects in Europe. Two initiatives offer great opportunities to project
promoters and investors:
• The European Investment Advisory Hub provides tailored advisory support to prepare and develop investment projects in the EU. For more information see: http://eiah.eib.org
• The European Investment Project Portal is a web portal enabling EU-based projects worth at least €5m to reach potential investors worldwide. The Portal is provided and hosted by the European Commission. For more information see: http://ec.europa.eu/eipp.
Take Advantage of EFSI/EIF Funding
The European Fund for Strategic Investments (EFSI) backs innovative projects that may need riskcoverage. The eligible sectors are environment and resource efficiency, transport, digital, energy, research and innovation, social infrastructure, smaller and midcap companies, bio-economy, and regional development
To benefit from EFSI support, projects must be:
• Commercially sound, and economically and technically viable
• Contributing to EU objectives of sustainable growth and employment.
• Mature enough to be bankable.
• Priced in a manner commensurate with the risk taken.
How to Apply
Large infrastructure and innovation public or private promoters can apply for a loan through the European Investment Bank: www.eib.org/efsi
SMEs and mid-caps can seek financing for their projects via national promotional banks and local financial intermediaries: www.eif.org/what_we_do/efsi
