On Friday 29 May, the European Commission presented the details of the new ‘Solvency Support Instrument’, which will be temporary and accessible to all Member States and all sectors covered by the European Fund for Strategic Investments (EFSI), the financial arm of the ‘Juncker’ investment plan.
This instrument will enable “equity support to businesses all over Europe”, said, on Friday, Margrethe Vestager, Executive Vice-President of the Commission responsible for Competition (see EUROPE 12492/3). It will “focus on sectors where businesses need the most help. We are therefore focusing on the Member States and sectors hardest hit by the pandemic and on those Member States which are least able to provide equity support to businesses”.
The instrument, which will also target ecological and digital transitions and support for cross-border economic activities, will operate through the provision of an EU guarantee to the European Investment Bank (EIB) Group under the EFSI Fund. Solvency support will be a separate component of the EFSI, aimed at mobilising private capital.
'The EIB Group will use this guarantee to provide financing directly or invest, fund or guarantee equity funds, special purpose vehicles, investment platforms or national promotional banks.
“These intermediary funds must be established and operate in the EU and beneficiary companies must be economically viable”, said Ms Vestager.
The governance structure of the EFSI will be maintained and will apply to this new component until the end of the current Multiannual Financial Framework (MFF) at the end of 2020. Member States will not be involved in the decision making on the EFSI guarantee.
With a provisioning of €5 billion in 2020 under the current MFF, to ensure a quick start of the instrument, and an additional €26 billion from the Next Generation EU Recovery Plan, the EU budget will provide a total guarantee of around €75 billion to the EIB Group. This instrument will target an investment level of €300 billion in solvency support.
See the draft regulation: https://bit.ly/3eHUxsD (Original version in French by Lionel Changeur)