The European Commission hopes to generate more than €650 billion in private investment throughout the EU thanks to the fund InvestEU, which it presented on Wednesday 6 June. The aim is to offset the investment deficit within the EU, which has never returned to pre-crisis levels.
InvestEU, which brings together no fewer than 14 financial instruments in a single structure, is based on the success of the Juncker Plan, said Jyrki Katainen, the Vice-President with responsibility for Employment, Growth, Investment and Competitiveness, who stressed that the European Fund the Strategic Investments (EFSI) had raised around €290 billion in investments.
The Commission is proposing to earmark €15.2 billion for the Fund, so that it can provide a guarantee of €38 billion (compared to €33.5 billion for EFSI 2.0 – see EUROPE 11925), in the hope of achieving more than €650 billion in public-private investments throughout the EU over the forthcoming multiannual financial framework 2021-2027.
The multiplying coefficient will therefore be 13.7 on average, a source explained, which is slightly below that of the current Juncker Plan. This lower coefficient can be explained by the four areas ('windows') to be covered by the new fund, particularly in the social arena, where investment capacities are lower, a different source explained.
The other windows are sustainable infrastructure, research, innovation, digitalisation and small and medium-sized enterprises. The first priority has been allocated €11.5 billion and the latter two €11.25 billion. Around €4 billion will be channelled into social investments. However, these amounts could be adjusted by 15%, depending on how demand evolves.
More financial partners
The financial partners, chiefly the European Investment Bank (EIB) (the only intermediary in the EFSI), will contribute to the guarantee to achieve an aggregate total of €9.5 billion, or a total guarantee of €47.5 billion.
The Commission intends to work with other financial partners, including international financial institutions, such as the European Bank for Reconstruction and Development (EBRD) and the World Bank. This development can be explained by the nature of the projects targeted, some of which will be smaller and more granular.
Irrespective of their size, the projects financed must meet several major criteria, such as: - remedying market shortcomings and offsetting investment deficits whilst being economically viable; - creating a multiplying effect; - contributing to the strategic objectives of the EU. They will be selected by an independent investment committee.
5% of the cohesion policy
A major innovation is that the InvestEU fund will give member states the possibility to top up the EU guarantee using up to 5% of their funds from the EU cohesion policy. This would give the member states several advantages, according to one expert: they will be able to move away from the co-financing rates, take advantage of the EU's positive standing with ratings agencies and, in particular, not have to develop their own machinery to raise investments.
Advisory platform
The Commission is setting up an InvestEU advisory platform to provide technical support and assistance in preparatory, development and structuring work and in increasing capacities. To this end, it will bring together 13 existing advisory services under one roof.
It is worth noting that the Commission operates the InvestEU portal, the primary aim of which is to facilitate contract between investors and project-owners. (Original version in French by Pascal Hansens)