European Funds for Strategic Investment

Funds for Strategic Investments

On 13th January 2015 the European Commission presented the regulation for an EUR 315bn (£249bn) Investment Plan that will support long term higher risk strategic infrastructure projects and SMES and mid-cap firms in Europe.

The role of the Fund is to enhance risk-bearing capacity and mobilise extra investment, essentially from private sources, but also public sources, in specific sectors and areas.

The Fund, to be launched in June 2015, will be in operation for three years (2015 – 18).

What is it for?

The new Investment Plan – European Fund for Strategic Investment or EFSI (not to confuse with ESIF) – will be seeded with EUR21bn from the existing EU budget (no new money is involved), primarily from Horizon 2020 and the Connecting Europe Facility, and it will also include EUR 5bn from the EIB. This is hoped to leverage EUR 240 billion of private and public investment for long-term investments and EUR75 billion for SMEs and mid-cap firms. This represents a leverage ratio of 15 to 1.

Why is it needed?

While investment is taking off in the US and other parts of the world, Europe is lagging behind. The current investment levels are EUR 370bn below pre-crisis times.

How Member States will participate?

The EFSI will be open to contributions from Member States, directly or through National Promotional Banks. Member States will also be able to contribute either at the level of the risk-bearing capacity (complementing the contributions by the EU budget and the EIB), in an investment platform or by co-financing certain projects and activities.

How it will work?

Governance

EC and EIB have set up a joint European Investment Advisory Hub (EIAH) to provide advisory support to project identification, preparation and development across the EU. 

A Steering Board and a Committee will decide on the overall orientation, the investment guidelines, the risk profile, strategic policies and asset allocation of the Fund.

Projects 

There will be no thematic or geographic pre-allocations, projects will be chosen on their own merits, i.e. economic viability, level of maturity, European added value, potential to leverage other funds, socio-economic returns, etc. EFSI will only finance projects that cannot be financed solely by the public or private sectors.

Further information

Further information can be found on this link