European Investment Fund

The European Investment Fund was established by the articles of association of the European Investment Fund approved on 14 June 1994 and amended on 19 June 2000, 30 November 2007, 8 March 2012 and 27 May 2014 (hereinafter “the EIF”). The EIF was granted legal personality and financial autonomy.

The EIF can be defined as a public-private partnership. It is distinguished by its unique ownership structure, as the majority shareholder of the EIF is the European Investment Bank, holding 59.4% of the total shares. Moreover, 30% of shares are held by the European Commission and the remaining 10.6% by financial institutions from the EU Member States, the United Kingdom and Turkey. Of the Polish financial institutions, the EIF’s shares are held only by Bank Gospodarstwa Krajowego, which has invested EUR 8 million in the EIF, giving it 8 shares, or just 0.11% of all shares (as at 29.12.2021).

As of 2021, the EIF’s capital is €7.37 billion and consists of 7,370 shares with a nominal value of €1 million each.

Responsibilities of the EIF

The articles of association of the EIF outline in general terms that the mission of the EIF is to promote the achievement of the objectives of the European Union. The activities of the EIF are to be based on sound banking principles and other sound commercial principles and practices applicable.

The tasks of the EIF are therefore defined very broadly. However, you can find out more from the EIF website (read here). The EIF’s core mission is to support European small and medium-sized enterprises. This support takes place by helping them to access the finance they need to grow.

The EIF’s tasks are carried out through:

• providing guarantees and other comparable instruments in respect of loans and other financial obligations, in any legally permissible form,
• the acquisition, holding, management and disposal of shares in any undertaking.

Equity products

The EIF is the leading institution in the European private equity market. Among other things, the EIF invests in venture capital, growth and mezzanine funds, which in turn support small and medium-sized entrepreneurs. Investments take place at every stage of development of the support recipients.

To this end, the EIF creates specialised instruments such as:

1. The AI Co-Investment Facility – a €150 million co-investment facility aimed solely at entrepreneurs involved in the development and application of artificial intelligence;
2. The Climate & Infrastructure Funds (C&IFs) – an instrument consisting of two sources of funding totalling €400 – 600 million per year over the next few years. The facility focuses on climate and environmental sustainability investments such as green energy, energy efficiency, digital economy, sustainable mobility, circular economy, urban development and social infrastructure;
3. Technology Transfer – this facility aims to provide financial support to sustainable structures or funds investing in projects or start-ups at the proof-of-concept, pre-seed, seed, post-seed stages to A and B rounds, where the companies can be further funded by a normal venture capital / private equity investor;
4. European Angels Fund – an instrument designed to provide capital to Business Angels and other non-institutional investors who want to finance innovative companies in the form of co-investments. EAF invests jointly with these investors at the seed, early or growth stage. EAF has invested €330 million to date, engaging 120 Business Angels and collectively building a portfolio of over 800 co-investments in SME companies;
5. The Social Impact Accelerator – an instrument I wrote more about in my article on EuSEF funds (read here);
6. The Mezzanine Facility for Growth – a €1 billion fund of funds mandate from the European Investment Bank. The funds are to be invested in hybrid debt/equity funds, with the aim of playing a catalytic role in the mezzanine fund segment.

Debt products

The EIF also provides support through various debt instruments. For this purpose, the EIF cooperates with numerous financial institutions such as banks, leasing companies, guarantee funds, mutual guarantee institutions, promotional banks and others.

The two main guarantee instruments of the EIF include:

1. Loan enhancement/securitisation;
2. Guarantees/counter-guarantees for portfolios of micro-loans, loans or leases to entrepreneurs in the SME sector

In order to fulfil its tasks, the EIF has created various instruments and programmes under which it invests investors’ funds. From the EIF’s portfolio, one can distinguish:

1. AGRI Guarantee Facility – an initiative managed by the EIF on behalf of the European Commission. Its main objective is to increase access to finance for farmers, farms, cooperatives, rural micro or small enterprises, forestry enterprises in EU Member States;
2. Cultural and Creative Sectors Guarantee Facility (CCS GF) – an initiative managed by the EIF on behalf of the European Commission. The CCS GF was established to support small and medium-sized enteprises in the cultural and broader creative sectors;
3. ENSI – a platform for cooperation between the EIF and several economic development institutions in the EU. The main task of this cooperation is to make finance more available for SMEs by stimulating the SME securitisation market and catalysing private sector assets;
4. The Erasmus+ Master Loan Guarantee Facility – is one of the EIF’s best-recognised initiatives, implemented to enhance access to funding to enable students from across the European Union to study in another Erasmus+ country;
5. The SME Initiative – The EIF has been entrusted with the implementation and management of the SME Initiative, which is co-funded by the EU through COSME and/or Horizon 2020, and also by the European Investment Bank Group.

In addition to the above-mentioned programmes, the EIF also implemented local programmes to support regions in Europe such as Greece, Italy, Bulgaria, Malta, Romania, Spain and others.

European Fund for Strategic Investments

The European Fund for Strategic Investments, or EFIS for short, is one of the largest programmes implemented by the European Commission and the European Investment Bank. The investment volume stood at €500 billion. EFIS support is provided through two programmes:

1. “Infrastructure and innovation” – dedicated to long-term, high-value projects;
2. “SMEs and mid-cap companies” – dedicated to entities with up to 3,000 employees.

The activities under the second programme are mainly carried out by the EIF. This support is primarily aimed at mobilising preferential repayable financing for SMEs and mid-caps for specific purposes, which must be in line with the EU framework programmes:

• InnovFin (Horizon 2020) research and innovation;
• COSME – Strengthening entrepreneurship and competitiveness of SMEs;
• EaSI – promoting high levels of employment and social innovation.

The EIF implements support to the SME sector under the EIF via financial instruments (repayable support), which are provided by financial intermediaries such as investment funds, banks, leasing funds and others.

Summary

The wide range of programmes and initiatives implemented or co-implemented by the EIF to support SME entrepreneurs means that most innovative companies are likely to be assisted by the financial products provided by the EIF. Contact with the EIF does not take place directly, as the EIF implements its services through EIF intermediaries in the respective Member State. A list of institutions cooperating with the EIF is maintained for each EU Member State. The list for Poland is available at the link: (read here)