Competitiveness & Growth

Throughout the year, we have supported European businesses in their growth strategies and helped strengthen their competitiveness.

EFSI in particular has demonstrated its effectiveness in responding to market needs, offering a diverse product range to reduce financing gaps.

We have continued to help the development of a pan-European market for alternative lending. The EFSI Private Credit Tailored for SMEs portfolio has now been fully deployed. In parallel, our synthetic securitisation product proved a valuable capital relief tool for intermediaries, expanding to new geographies where the market is less mature, and generating much-needed financing for small businesses.

We also strengthened our relationship with important market players in the venture capital and private equity space, including business angels, placed particular emphasis on growth-stage financing and expanded our private investor base through the Asset Management Umbrella Fund.


Risk Capital Resources (RCR)

The EIB Risk Capital Resources (RCR) mandate is the core pillar of the EIF’s equity activity and is a critical resource that has enabled the EIF to pursue its equity strategy in the venture capital and growth segments for more than 15 years.

In 2020, more than EUR 850m have been committed to help European companies in the growth stage of their development. RCR resources also play a key role in unlocking and scaling-up regional funds-of-funds, the ESIF and NPI mandates and the European Angels Fund’s compartments.

Through RCR’s overall EUR 14bn of commitments into venture capital and private equity funds, we provide financial resources to market segments with prevalent market failures or sub-optimal investment situations. At the same time, the long-term goal is to develop market segments such that they become increasingly independent of public sector support.

RCR was the core pillar of the EIB Group’s equity activity and support to the European economy through EFSI stemming from the first EUR 2.5bn tranche approved in 2015 and the additional EUR 1.5bn resources approved in 2018. Two dedicated RCR windows were also deployed: the EFSI Future Stars Window and the ESIF Co-Investment Window.

As of December 2020, RCR’s portfolio comprises 628 active signed funds, which include more than 50 unicorns and a number of realised and unrealised dragons, giving us unmatched know-how and insight into the market.


EFSI - taking stock

The European Fund for Strategic Investments – EFSI – was launched in July 2015, and aimed to tackle the lack of confidence and investment, which resulted from the economic and financial crisis, facilitating access to finance across the European economy.

Five years down the line, EFSI can be considered a resounding success. In what was a first collaboration at this scale with not only the EC and the EIB, but also national promotional institutions and hundreds of financial institutions across the EU, the EIF has deployed EUR 10.75bn of EFSI resources to support around 1.5 million small businesses all over the EU through 817 transactions. In doing so, we generated more than EUR 230bn worth of financing for European SMEs and ambitious entrepreneurs.

EFSI has been particularly effective at crowding in private capital to serve public policy objectives, by achieving a multiplier effect of 21x for each euro committed by the EIF. Its impact has been most intense where it was needed the most: the top-10 countries ranked in terms of EFSI mobilised resources relative to GDP include Greece, Bulgaria, Portugal, Estonia, Czech Republic, Slovenia, Hungary and Croatia.

Overall, EFSI has been a very effective tool, testament to the significant added value of financial instruments in achieving policy objectives. We have deployed enormous amounts of resources with a high degree of flexibility, a lean governance structure and a very diverse toolkit ranging from private equity and venture capital to guarantees, loan funds and securitisation. Beyond financing, it has allowed the EIF to make an important contribution to developing certain markets and ecosystems, be it venture capital, disruptive technologies or the cultural and creative sectors, crowding in financing and strengthening Europe’s competitiveness on the global stage.

It has enabled us to support riskier businesses that would otherwise struggle to get financing, less commercially-developed actors, first-timers and expand the use of financial instruments as a tool for policy-making across the EU. Through EFSI’s diverse product toolkit, we have been able to address specific financing needs in fields and sectors of high policy relevance such as innovation, competitiveness and scale-up financing, microfinance and social entrepreneurship, culture and creativity, digitalisation, social and environmental impact.

Looking ahead, it has also been an opportunity to develop and implement a number of pilot programmes in other areas of strategic importance to the EU: AI, BT, space, blue economy, skills and education, paving the way for the new generation of EU financial instruments and in particular InvestEU.

Clariness: Boosting clinical trials

Location

Hamburg, Germany


Financial Intermediary

Rocket Internet Capital Partners


EIF financing

RCR/own resources / ERP / EFSI sub-window 1


Financing purpose

product development / internationalisation


Number of employees

120

“Our aim is to bring more transparency into the clinical trials space, increasing awareness among patients, with public data and easy access. Clarity and openness, that’s what our company is about.”

Michael Stadler

CEO & co-founder


Capped guarantees - COSME

Since its launch in 2014, COSME’s success has exceeded expectations. Through products such as the Loan Guarantee Facility (LGF), where we take part of the risk away from financial intermediaries so that they can lend more, over EUR 2.6bn has been deployed throughout Europe and more than 1 million small businesses are expected to be able to access no less than EUR 60bn worth of financing that they may not have secured otherwise.

In 2020, the resources made available were vital as COVID-19 relief for hard-hit companies. This support was provided using additional EFSI resources and introducing greater flexibility in the LGF terms and conditions, ultimately helping businesses to withstand the first impact of the pandemic.

In addition, we expanded to new geographies not covered by the programme before: In Malta, we joined forces with Malta Development Bank to put in place a counter-guarantee that will offer businesses credit facilities worth more than EUR 100m helping to address market failures, and in Iceland, we extended a guarantee to a portfolio of up to EUR 20m worth of loans to Icelandic financial intermediary Byggðastofnun allowing more lending to fragile communities in the Icelandic countryside.


Growth-stage financing: ESCALAR

The European Scale-up Action for Risk capital (ESCALAR) pilot programme was launched by the EIF using EFSI resources to address the financing gap experienced by high growth European companies (scale-ups). The aim is to enable promising companies to scale up in Europe and help reinforce Europe’s economic and technological sovereignty.

ESCALAR will provide up to EUR 300m aiming to increase the investment capacity of venture capital and private equity funds with an investment focus on scale-ups. This in turn is expected to trigger investments of up to EUR 1.2bn to support promising companies. By substantially increasing fund resources, ESCALAR’s intention is to allow larger investment tickets and create greater capacity for making (follow-on) investments in scale-ups.

The initiative received a positive market reaction, with 89 applications received. The first commitment to a fund came in late 2020, in the form of a EUR 37.5m (SEK 376m) participation in eEquity IV, a digital growth equity investor in the Nordics, which will invest growth capital in disruptive European internet businesses. The investment strategy of eEquity focuses on e-commerce and internet retailing with global reach. The new fund aims to invest equity tickets of EUR 3-15m (SEK 30-150m) in up to 12 European SMEs.


Engaging with private investors: AMUF

In order to further attract private investors into the financing of the European economy, and in particular into start-ups and growing SMEs, the EIF has developed a product offering relying on its deep and long-standing expertise in the field of private equity.

Despite the COVID-19 uncertainties, AMUF continued to enlarge its investor base in 2020. To overcome the challenges thrown up by the inability to meet with investors in person, we have built relationships with distributors with broad knowledge of this market that have enabled us to reach out to new investors.

In total, AMUF has welcomed six new investors in 2020 including Finanziaria Internazionale I FoFs, an Italian asset manager (EUR 17m), and HUK-Coburg, a German mutual insurance company (EUR 25m). HUK-Coburg's participation gives a strong signal for further insurance companies to join AMUF.

This has brought the total AMUF assets under management to EUR 643m from 15 investors (seven countries) since its launch. It has invested so far in 48 private equity and venture capital funds in technology, life science, growth capital secondaries and private credit, with a unique ability to leverage private funds to finance sectors of policy relevance.

Confirming the very promising start, the underlying portfolio includes seven unicorns and already the two first successful exits: Inflazome (drug discovery) and Spacemaker (multimedia & design software).


Record year for securitisation

This year, our activity in the field of securitisation reached a record total of just under EUR 4bn in commitments - a figure double that of previous years – contributing to revitalising the securitisation market, opening new geographies and ultimately aiming to generate up to EUR 9.3bn worth of new loans for European SMEs.

The EIF demonstrated the opportunity provided by synthetic securitisation to deliver capital relief products in jurisdictions that traditionally have not enjoyed a strong presence in securitisation markets. In particular, 2020 saw first-time synthetic securitisation transactions in Slovakia, Romania and the Baltic states, contributing also to the COVID-19 response efforts.

Strengthening the collaboration with BNP Paribas, the EIF and the EIB provided a mezzanine guarantee on a EUR 1.3bn portfolio of French SME and mid-cap loans. This EFSI-supported guarantee will release regulatory capital for BNP Paribas and will enable it to provide further lending of up to EUR 515m to SMEs and mid-caps in France. This is the first synthetic transaction signed in France under the new STS format that will allow BNP Paribas to retain only 10% of risk weight asset for the senior tranche.

In addition to other transactions signed in Germany and Austria, this demonstrates the growing demand for securitisation and confirms its role as an effective tool for managing capital and therefore freeing up capacity for new lending to SMEs and small-mid-caps. At the same time, it is extremely valuable for promoting the Capital Markets Union, and building know-how and experience in the markets, thus facilitating similar transactions in the future with the participation of other private market participants.


Offering new debt options:

Diversified debt funds

In keeping with our commitment to boost the European market for alternative lending, the selection process for the EFSI Private Credit Tailored for SMEs programme has now been completed. This translates into a total commitment of EUR 713m in 19 private credit funds so far.

In line with our policy objectives (support to tailor-made financing for smaller companies; support for first-time managers; catalytic effect; pan-European coverage), we have continued to help the development of a pan-European market for the alternative lending industry. This was particularly evident in jurisdictions where diversified debt funds are a relatively new asset class like Poland, Ireland, Finland, Slovenia and Croatia.

With the COVID-19 situation, fund-raising has been a challenge for fund managers, especially first-timers. Still some first-time private credit funds supported by the EIF as cornerstone investor, such as Creditshelf and ODDO BHF Asset Management, did manage to reach their first closings during the lockdown period.


Continued collaboration with Business Angels

Business Angel (BA) financing has remained an important source of early-stage funding for highly innovative companies throughout 2020. These private high-net-worth individuals provide a unique investment method, which goes far beyond cash. They do not just invest their own money; they also bring with them their own experience as successful entrepreneurs and prefer a closer, more personal relationship with their investees. They are vital actors of the venture capital ecosystem in crisis times, particularly since they often come in at the very early stages of a company’s life when not much else is available in terms of financing.

Despite COVID-19, the European Angels Fund (EAF) continued its geographical expansion with the first signature of a BA under the EAF Pan-European and Italian compartments. To date, the EIF has committed around EUR 340m to 119 business angel investors, who have individually built up a portfolio of more than 800 SMEs under the EAF.

In addition, the EIF has signed a BA co-investment fund in Bulgaria under the InnovFin Equity programme, while in 2020 and for the first time in Greece, the EIF was entrusted with the management of JEREMIE legacy resources to further support Greek SMEs. The first instrument to be deployed is a unique one for the Greek market: a Business Angels’ Co-Investment Equity Instrument. Through this initiative, the EIF is able to support a co-investment fund that will co-finance alongside existing, currently active angel investors (but also aim to mobilise potential new ones) to support nascent business ideas. The initial allocation to this Business Angels’ Financial Instrument will amount to EUR 20m, fully funded out of the JEREMIE reflows.

Phenix: Ending waste together

Location

Paris, France


Financial Intermediary

ETF Partners


EIF financing

RCR/own resources; EFSI sub-window 1


Financing purpose

platform development, scaling; hiring developers


Number of employees

160

“The amount of food we throw away each year could feed millions of people. So much is wasted for nothing this is bad for our purse and bad for the planet. We want to change things and make a positive impact on society.”

Jean Moreau

Co-founder & CEO


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