Investment Plan for Europe

There are opportunities for investors in the EU and aboard: The Plan is intended to trigger 315 billion Euro in investment by 2018. It also applies to investments in the Circular Economy.

The European Commission and the European Investment Bank (EIB) proposed the Investment Plan for Europe in November 2014 as an initiative to fight economic weakness lingering from the 2008 financial crisis. One pillar of the Investment Plan is the European Fund for Strategic Investments (EFSI), which combines an EU budget guarantee and EIB resources. The other two pillars involve regulatory reform and technical assistance.

The EFSI finances a greater number of operations with a higher risk than the EIB previously did, attracting private investment and targeting market failures. The aim is “to overcome market failures by addressing market gaps and mobilizing private investment,” the EU Commission informs on its homepage. It will support strategic investments in key areas as well as risk finance for small businesses.

According to the information, the Plan supports investments in the real economy, and therefore there are new opportunities available for
■ institutional investors in the EU and abroad
■ project promoters
■ small and medium-sized enterprises (SMEs).

Sectors financed

The European Fund for Strategic Investments (EFSI) is available for economically viable projects, including projects with a risk profile. It focuses on sectors which support sustainable growth and employment in the EU:

■    strategic infrastructure (digital, transport and energy)
■    environmentally sustainable projects (renewable energy and resource efficiency)
■    urban and rural development as well as social projects
■    education and training, research, development and innovation
■    investments boosting employment, in particular support for smaller businesses and midcap companies Financial instruments under the Investment Plan are integrated into the European Investment Bank Group.

Three pillars

The Investment Plan for Europe consists of three pillars.
■    The European Fund for Strategic Investments which provides an EU guarantee to mobilize private investment.
■    The European Investment Advisory Hub and the European Investment Project Portal which provide technical assistance and greater visibility of investment opportunities and thereby help investment projects reach the real economy.
■    Removing regulatory barriers to investments.

Under the first pillar, the market absorption has been particularly quick under the so-called SME window, where EFSI is delivering well beyond expectations, according to the EU Commission. To ensure that sufficient funding is available to continue providing finance to SMEs with EFSI support, the SME window was scaled up by 500 million Euro in July 2016.

Under the second pillar, the European Investment Advisory Hub was launched in September 2015. Project promoters, public authorities and private companies can receive technical support to help to get their projects off the ground, make them investment-ready. They can get advice on suitable funding sources and access a unique range of technical and financial expertise.

In order to provide investors with more visibility about existing investment opportunities in the EU, the Commission has created the European Investment Project Portal (https://ec.europa.eu/eipp/desktop/en/index.html), which went live in June 2016. Project promoters can submit their projects online, where they are matched with relevant investment opportunities.

In order to remove barriers to investment – the third pillar of the Investment Plan – the Commission has proposed concrete initiatives to help support investment and facilitate the financing of the real economy, such as lowering capital charges for insurance and reinsurance companies as regards infrastructure investments. “The Energy Union, the Capital Markets Union, the Single Market and the Digital Single Market Strategies, as well as the Circular Economy package all contain specific measures that will remove barriers, promote innovation and further improve the environment for investment, if fully implemented,” the European Commission is convinced.

Photo: pixabay

GR22017

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