Highlights
What we do
The EIF designs financial instruments that absorb part of the risk that is taken by banks, guarantee institutions, microfinance lenders and funds when they finance small businesses, individuals, and infrastructure projects. This encourages funds to invest, banks to lend, and private investment to be crowded in, creating a more sustainable financing ecosystem for Europe’s small and medium-sized enterprises (SMEs).
Our objectives
We work with our partners to deploy capital in areas that need it, from businesses active in the digital economy to traditional farmers. This means identifying underserved areas, whether that be geographical, or structural like early-stage or growth-stage businesses, designing and deploying an appropriate financial instrument, and ensuring not only that European entrepreneurs get the support they need, but also that markets and sectors of strategic importance to the EU are developed and strengthened. It means knowing our markets so well that one comparatively commitment to a carefully selected bank or fund can generate millions of additional euros for small European businesses. In these efforts, we work closely with the European Commission and the EIB to ensure that our interventions have a clear policy direction, pursuing a greener, digital and more inclusive Europe.
Our stakeholders
The EIF works with many stakeholders –the European Commission (EC), Member States, a large network of banks, including national promotional institutions (NPIs), leasing and micro-finance providers, lending platforms, private credit (PC), venture capital (VC) and private equity (PE) funds, private investors and, of course, our parent organisation, the European Investment Bank (EIB). Resources invested by the EIF include the EIF’s own funds as well as resources entrusted to us by the EIB and the European Union (EU), national and regional institutions, and other public bodies, or private capital.
What have we been doing this year?
Pressing ahead with InvestEU
Once again, the European Commission’s InvestEU programme has been the main instrument driving the EIF’s work, aiming to unlock financing for small businesses across the EU and drive key sectors of the economy. Now at cruising speed, InvestEU accounted for 39% of our 2023 activity by year end. The programme saw more than €9.2bn worth of commitments to financial intermediaries across 26 EU Member States, while the number of final recipients already supported has grown to more than 26,000, of which more than 17,000 concern micro-businesses1.
Across the EU, the guarantee products have been met with strong demand, far exceeding the available firepower, while financial intermediaries have been taking full advantage of the streamlined nature of the new programme, applying for several different products through one single application. This has also allowed for swift deployment, with year-end figures standing at just under half of the overall InvestEU financial resources.
At the same time, agreements have been signed with Norway and Iceland, expanding the programme beyond the EU, while advisory activities have intensified in partnership with the EIB, boosting the non-financial dimension of the EU’s support for small businesses. The basic principle in the implementation of advisory activities is to help close financial intermediaries’ knowledge gaps and facilitate the deployment of our products.
Throughout this year, six market studies were delivered, enhancing our mapping of relevant financial intermediaries and knowledge of market specificities, covering topics of relevance for the InvestEU programme, such as skills and education, culture and the creative sectors, and gender equality, among others. More than ten webinars and five physical events were held, helping to inform, educate and train financial intermediaries in priority areas such as space, semi-conductors, climate and sustainability, the blue economy, gender, and more. Three tools to support InvestEU product implementation are now also live in the market, including the sustainability guarantee webtool to check eligibility criteria, the green guide for fund managers and the ESCALAR model to support product assessment.
Looking ahead, in close collaboration with the EIB’s Advisory Services, advisory activities will continue to focus on market development to boost the engagement of new potential partners and capacity building to enhance the knowledge and expertise of financial intermediaries while maximising the deployment of EIF products.
196 mandates under management
Powering the European venture capital and private equity ecosystem
In 2023, VC and PE fund managers experienced a difficult fundraising environment, with global private equity fundraising reaching $508bn in the first nine months of 2023, equates to just 46% of the total funds raised in all of 2022. In these conditions, we continued to extend our support to the European ecosystem most notably through the EIB’s Risk Capital Resources (RCR) mandate.
RCR remains the core pillar of our equity activity and is a critical resource that has allowed us to pursue our equity strategy in the venture capital and growth segments for more than 25 years and be a reliable partner to European fund managers. In 2023, RCR accounted for 25% of total equity activity, committing €1.4bn to financial intermediaries, enabling us to co-invest alongside other mandates like InvestEU and various national mandates. As per our broader strategic approach, and in line with the EIB Group’s Climate Bank Roadmap, these investments prioritised fund managers contributing to the climate & energy transition.
€7bn commitments in Cohesion regions
Driving sustainability and green transformation efforts
In line with the Climate Bank Roadmap and the EU’s Green Deal, 2023 has seen our green activity grow significantly, representing 39% of our 2023 commitments, from greentech and cleantech investments, to private credit funds, infrastructure funds and InvestEU’s sustainability guarantee. Moreover, securitisation activity has made an important contribution by redirecting freed-up capital from a large number of transactions to sustainability-related investments.
In parallel, the REPowerEU mandate has not only been rolled out intensely, but also topped up by 50%, meaning that the EIF will be deploying – over and above the initial €3bn – a further €1.5bn. Pioneered by the European Commission in response to the global energy market disruption, the REPowerEU Plan originally foresaw €30bn worth of EIB Group financing for green energy to be delivered over five years through the end of 2027, with a focus on the three pillars of sustainable energy, energy efficiency and green innovation. The EIF’s delivery of our €3bn share of the programme started in 2023, with signatures this year into cleantech and energy transition funds amounting to €264m. Investments in renewable energy infrastructure funds reached €45m and will intensify next year. Given the considerable investments needed to achieve net-zero in Europe however, in May the EIB decided to increase the REPowerEU package by €15bn, of which the EIF will deploy €1.5bn into cleantech and energy transition VC/PE funds and renewable energy infra funds.
€18.4bn worth of approvals
Internal reorganisation
This past year has seen the EIF’s Human Resources team redefine its strategic direction, in line with organisational goals and the EIF’s vision, codifying our approach in the form of an HR Roadmap, which will shape our culture and working practices over the coming years. A restructuring of our organisation is underway to ensure that we are fit for the future, while improving our efficiency and delivery to our customers and stakeholders. This has begun with the establishment of a Senior and Executive Management Committee (ESMC) to assist decision-making and a new organisational chart that comprises six directorates, with a series of senior appointments and recruitments throughout 2023 and expected to continue into the first half of 2024 as the re-organisation really takes shape.
Becoming fit for the future has also involved progress on the digitalisation front, where, in close cooperation with the EIB, we pushed ahead with the delivery phase of our ambitious Digital Transformation Programme, which includes important EIB Group-level initiatives such as the Group Client Portal and the Group Data Strategy. Following best market practices and with the ultimate aim of enhancing operational efficiency, we established process optimisation activities and initiated the adoption of technologies such as robotic process automation and artificial intelligence.
38% of our equity intermediaries meet InvestEU gender criteria
Tackling the scale-up gap with ETCI
The new European Tech Champions Initiative (ETCI) was launched in February, with €500m worth of EIB Group resources alongside contributions from Germany, France, Spain, Italy and Belgium. In late 2023 the Netherlands also committed €100m, bringing the total size of the initiative to €3.85bn2.
Building on the EIF’s extensive work in the European venture capital markets, the ETCI is the first of its kind growth stage fund-of-funds in Europe. It aims to tackle the scale-up gap in the European venture capital ecosystem by investing in 10-15 VC funds of approximately €1bn in size. In turn, these funds are expected to mobilise more than €10bn worth of investments into innovative companies at the growth stage of their development.
This is about making sure that ambitious start-ups are able to find the financing they need to grow and expand – in the form of appropriate ticket sizes – right here in Europe, rather than having to relocate to other regions in search of elusive financial backing.
While last year was focussed on the ETCI’s initial fund-raising and structuring phase, this year saw the EIF, managing the initiative on behalf of the participating Member States and the EIB Group, setting the wheels in motion. This has included the organisation of roadshow events in Madrid and Berlin to increase awareness of the initiative and offer key information to potential investee fund managers.
At the same time, it has meant that our investment teams have been busy screening numerous ambitious proposals from fund managers. 25 fund proposals have been received in the course of the year, confirming the strong demand for this instrument, exceeding initial expectations. The first four fund investments have been made, representing a total investment of €883m, with several others in the pipeline as well. In turn, these four funds have raised more than €4.7bn to support European innovators in their growth ambitions. As this initiative really starts to gain momentum, these funds have already made investments worth just under €1bn into 9 investee companies in France, Germany, Italy, the Netherlands and Spain.
In parallel, fund-raising efforts are continuing with the formalisation of fresh commitments from other Member States expected in early 2024, boosting the initiative’s firepower, but also reconfirming the importance attached to the scale-up challenge.
93 new financial intermediaries
Working closely with the Member States
The European Commission's InvestEU programme also provides an opportunity for Member States to channel part of their Cohesion Policy funds (European Structural and Investment Funds - ESIF) or their Recovery and Resilience Facility (RRF) funds to a dedicated Member States Compartment for each policy area. In this context, the EIF also incentivises intermediaries to put in place environmental and social safeguards and helps them verify compliance with existing environmental and social legislation, for example, when checking compliance as part of the InvestEU sustainability proofing.
This possibility under the InvestEU programme allows the EIF to help Member States with the deployment of their financial support to small businesses, taking advantage of our expertise and extensive experience in this area, and maximising the potential additionality, crowding in further private resources and strengthening market-building efforts. The unique engagement rules of InvestEU also allow for a degree of standardisation across the continent and a stronger focus on the public policy objectives that form the backbone of the InvestEU programme.
In total, last year saw the EIF conclude 18 new national or regional mandates, representing commitments of around €4bn, signifying important growth in this field of our work, underlining the trust that has been built over the years between the EIF on the one hand, and national and regional governments on the other, and also bringing EU and national policy-making closer together.
In France, in particular, five new funding agreements were signed, totalling €250m worth of investments, with regional authorities in Occitanie (two), Normandie, La Reunion, and Auvergne-Rhône-Alpes. This brings the total assets under management in French regions close to €800m, allowing us to make an important contribution to reinforcing the competitiveness of French SMEs, fostering innovation, promoting social inclusion, and contributing to the green transition, especially in the agricultural sector.
Boosting securitisation efforts
In the course of 2023, one tool that has emerged as particularly impactful has been securitisation. As we continue to experience the effects of climate change, it has been very encouraging to see the impact that securitisation transactions can have, most notably as a tool to drive the green transition, with many deals aimed at generating fresh financing for energy efficiency initiatives, CO2-emissions reduction efforts, and other sustainability-related efforts. Securitisation is proving to be an important tool to hedge risk, manage balance sheets, and generate the flexibility needed to allow our partners to target specific market segments like those relating to the green transition.
In total, the EIF signed tranches in 21 securitisation transactions across nine countries for a total investment amount of around €3bn during this past year – representing one-fifth of our annual commitments. That has meant that our partners have committed to deploying a combined amount of €5.7bn in the form of new lending for the real economy, of which at least €2.4bn will be dedicated to green projects.
In addition, the EIF also worked on the structuring of the EIB’s direct investments in cash securitisations amounting to €2.8bn in 2023. These investments will generate new lending of €5.2bn, of which €1.4bn will contribute further to the EIB Group’s Climate Action target.
Securitisation has also made an important contribution to our cohesion and market-building targets, with a total of €1.7bn invested in securitisation transactions in Central and Eastern Europe, a region with a relatively nascent securitisation market. This investment represents 56% of our total securitisation efforts for 2023.
1. Data on final recipients as at 30 September 2023
2. This figure also includes conditional commitments from Member States
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