The global economic and financial crisis has reduced investment levels in Europe. Economic instability has led to investors fearing risk-taking and being unwilling to trust in market reliability. Because of this, many good projects remain without the required funding.
The strengthening of Europe’s competitiveness requires a significant growth in investment levels. Finland also needs greater investment in order to help with economic renewal and growth.
The EFSI, set up by the European Commission, is part of the Investment Plan for Europe, which is aimed at increasing investment levels, speeding up economic growth and boosting employment. The EFSI operates in conjunction with the European Investment Bank.
The EFSI offers guarantee arrangements and funding to support economically viable investments. The aim is to direct the majority of funding towards infrastructural and industrial regeneration investments, with around a quarter going to SMEs, both through loans as well as through investments channelled through various funds. The funding available through the EFSI is also suited to joint public and private sector projects and PPPs as well as businesses’ R&D projects.
The EFSI does not offer grants, nor does it act as sole funder for projects. The funding provided by the EFSI aids with the obtaining of the remaining funding required for high risk projects. In the projects, EFSI funding is combined with the project’s own funding, funds obtained from other parties, and investor capital.
Applying for funding
Almost all businesses and corporations that take part in investments may receive funding from the EFSI. Application for funding can be made as long as the project fulfils the sector-specific criteria, is profitable, and has funding also from other sources. The EFSI does not provide funding for projects involving direct risk to the state. This should be taken into account when preparing public sector projects. EFSI-guaranteed funding can be received by:
- Finnish business and other associations of every size and type (SME applications made through intermediaries)
- public entities, bodies governed by public law, and companies providing public services
Additional sources of EFSI funding
- Funding is also channelled through national development banks, financial institutions operating as intermediaries, capital and debt financing funds,
- and investment arrangements that enable funding for projects and sectors where no direct instruments or intermediary organisations are currently on offer.
Initiating funding applications
The first step in seeking funding from the EFSI is to take a look at the EFSI web pages or make contact direct with the European Investment Bank. Using the Investment Project Suitability Assessment Tool (in Finnish) on the EFSI web pages, one can:
- assess whether the project is suitable for funding through EFSI funding mechanisms.
- assess which EFSI funding mechanisms would be suitable for the project.
- assess which EFSI intermediary organisation or other organisation would be best to make contact with regarding the project.
Potential applicants may also make direct contact with the EFSI investment advisory hub: +358 29 460 2582 or submit a contact request to esir(at)finnvera.fi
If the project is suitable for EFSI funding then either connection is established with a suitable intermediary organisation or the applicant is advised about other further steps to be taken. The investment information services provides more detailed guidance for public sector projects eligible for funding.
EFSI funding is channelled to the projects via the European Investment Bank and its intermediary organisations. In Finland, the funding organisations under the Ministry of Employment and the Economy, such as Finnvera, Finnish Industry Investment Ltd., and the Finnish Funding Agency for Innovation (Tekes), operate as key intermediary organisations for funding and information regarding the EFSI. Banks, and other financial institutions and funds may also become intermediary organisations. It is also possible to create different investment arrangements that combine funders and projects. The Ministry of Employment and the Economy coordinates the utilisation of the EFSI in Finland in cooperation with other ministries and bodies.
EFSI terms and charges
The EFSI can kick-start profitable investments whose risk levels may be higher than those normally receiving funding from the European Investment Bank. The project must always have secured private funding as well. If a project is granted EFSI funding, the precise terms and conditions of the funding are determined through normal funding procedures, where the terms and charges are based on assessment of the project’s creditworthiness. In addition, the funding may include higher-risk funding mechanisms based on shareholders’ equity.
EFSI investment advisory
The EFSI investment advisory service provides information about the fund and how to begin the funding application process. It operates also as a national link between the European Investment Bank, commercial banks, national development banks and other intermediary organisations. The investment advisory service operates under the guidance of the Ministry of Employment and the Economy. The information service is provided in cooperation with the Financial Advisory Services Inspira Ltd.
Finnvera deepens cooperation with the European Investment Advisory Hub
Finnvera and the European Investment Bank (EIB) have signed a Memorandum of Understanding on cooperation with the European Investment Advisory Hub (EIAH).
The cooperation covers such issues as the exchange of information and the sharing of good operating models. It can also mean participation in the EIAH working groups, discussions and, for example, in initiatives intended for the exchange of information or development of a national advisory service.
The European Investment Advisory Hub (EIAH), a join initiative of the European Commission and of the EIB, is part of the second pillar of the Investment Plan for Europe (IPE) seeking to strengthen Europe’s investment and business environment through the following activities:
- Enhance the technical and financial capacity of public authorities and private actors in the Member States to identify, prioritise, prepare, structure, aggregate and implement strategic projects that are in line with EU policy objectives;
- Contribute to a more efficient use of EU funds and leverage private capital, including provision of advice on the establishment of investment platforms;
- Provision of a cooperation platform for peer-to-peer exchange and sharing of know-how regarding project development.
So far, the EIAH has signed more than twenty Memoranda of Understanding with the other National Promotional Institutions from all over Europe. As part of the Investment Plan for Europe, Finnvera also maintains advisory service (esir.fi) for the European Fund for Strategic Investments (EFSI).
“The cooperation launched today improves the possibilities of Finnish investment projects to make use of the European Investment Advisory Hub. A central feature of this participation is also the development of cooperation with other national Team Finland actors,” says Pauli Heikkilä, CEO of Finnvera.
The Memorandum of Understanding will be in effect until the end of 2020.
Valtteri Vento, Programme Manager, Finnvera plc
+358 29 460 2531