Highlights

“The EIF is a dynamic place and we want to keep it that way! At the same time we’re developing new tools to better articulate and channel our work in response to the major thematic challenges facing Europe, like the green and digital transitions and social inclusion.”

Ewen McMillan EIF

What we do

The EIF designs financial instruments that absorb some of the risk that banks, guarantee institutions, microfinance lenders and funds take when they finance small businesses. This encourages banks to lend, funds to invest and private investment to crowd in, creating a sustainable financing ecosystem for Europe’s small and medium-sized enterprises (SMEs).

Our objectives

We believe in small – Europe’s small businesses. This means working with our partners to deploy capital in areas that need it, from innovative businesses to traditional farmers. It means identifying underserved areas, whether that be geographical or structural, like early-stage or growth-stage businesses. It means knowing our markets so well that one comparatively small commitment in a carefully selected bank or fund can generate millions of extra euros for small businesses.

Our stakeholders

The EIF works with many stakeholders – Member States, the European Commission (EC), a large network of banks, including national promotional institutions (NPIs), leasing and micro-finance providers, lending platforms, funds, private investors and our parent organisation, the European Investment Bank (EIB). Resources invested by the EIF come from our shareholders: the EIB and the European Union (EU), represented by the European Commission, national and regional institutions, other public bodies, private capital and the EIF’s own funds.

What have we been doing this year?

European Guarantee Fund

As part of the EIB Group’s response to the pandemic, we have been fully engaged in the roll-out of the European Guarantee Fund (EGF), deploying record amounts of financing over the course of the year. The EGF has galvanised the EIF like nothing ever before. We have put all our efforts behind its deployment, making the impossible possible within the 12 months of 2021, with the goal of making available as much financing as possible for European businesses dealing with the economic fallout of the pandemic. A total of 295 transactions were signed, representing commitments of €26.2bn, including both EGF resources and EIB senior risk cover. At the end of the day, what matters is that these transactions will make available no less than €115bn for European businesses as they plot their path on the road to recovery.

This effort has come over and above normal EIF activity, propelling our total commitments for 2021 to just over €30.5bn - a number more than double last year’s performance, which was a record in itself.

Capital Increase

One important development that made it possible for us to generate this year’s volume of activity was the capital increase. In February, EIF shareholders approved a 64% increase in authorised capital at the General Meeting, from €4.5bn to €7.37bn, translating into a substantial €1.25bn cash injection for the organisation. The broad support for the capital increase demonstrates the commitment of EIF shareholders to the work and impact of the EIF and reinforces the tripartite shareholder structure.

Introducing Public Policy Goals

At the same time, the EIF has continued along the path of establishing a thematic approach to addressing financing gaps for SMEs. New Public Policy Goals (PPGs) have been adopted and are now being systematically tracked. This thematic structure is entirely in tune with shifting priorities, and in particular, the EIB Group’s Climate Bank Roadmap, EU priorities for the twin digital and green transitions, social resilience before and the corresponding focus of the InvestEU programme, but also demand from regional mandators and private investors. The focus on policy impact is progressively being embedded in EIF activity and is being cascaded throughout the entire organisation from the mandate acquisition strategy through to deployment, reporting and monitoring. This shift in our orientation towards a more thematic and impact-driven institution will allow us to better serve our partners at the EC and national and regional level, translating policy objectives into tangible support for the real economy.

Pursuing policy priorities

Beyond our EGF efforts, we continued to make targeted interventions across Europe and in specific sectors and industries, as part of our work with the EC on the tail-end of the European Fund for Strategic Investments (EFSI) and other financial instruments, but also through tailored national and regional instruments. By focusing on specific areas like innovation, the green and digital transitions, social impact and inclusion, human capital, growth and competitiveness, we have sought to give small businesses all over Europe better access to the financial resources they need to make the next step, be it start-up or scale-up, transition or total transformation. And in doing so, we have tried to contribute to the competitiveness of the European economy on the global scene at both the macro level and the micro level, whilst promoting policies close to our heart like diversity and inclusiveness.

InvestEU preparations

A year of preparatory work and negotiations with the EC has come to an end, and the new InvestEU programme is expected to be launched in early 2022. The new programme introduces important changes to the way EU financial instruments are designed and implemented bringing them all together under one roof with a strong thematic focus targeting a green, inclusive and digital transition as Europe recovers from the crisis. The EIF will be a key implementing partner of the Commission for InvestEU, operating under all its four policy windows: Sustainable Infrastructure window (SIW); Research, Innovation and Digitisation window (RIDW); SME window (SMEW) and Social Investment and Skills window (SISW).

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