What are Investment Platforms?
Investment Platforms can help to finance smaller projects and bundle funds from different sources to enable diversified investments with a geographic or thematic focus. They help to better share risk, make it easier to attract private investors and eventually unlock financing for individual projects. An Investment Platform can combine EU funds, national support and financing from private investors. The Platform itself can then provide loans, guarantees and/or equity financing to the underlying projects, depending on their specific needs.
The European Fund for Strategic Investments (EFSI), the financial pillar of the Investment Plan for Europe (IPE or Juncker Plan) can provide financial support to such Investment Platforms. The set-up of EFSI Investment Platforms can be flexible. Both public and private actors can establish such platforms (they typically also provide part of the financing), with the legal form and the financing structure to be determined depending on the projects’ needs and the main investors’ interests (managed account, co-investment agreement, Special Purpose Vehicle, etc.). Financing for economic, environmental, and social purposes can then be provided through Investment Platforms supported by EFSI to help achieve the aims of the IPE.
The Advisory Hub can give specific advice to help develop and structure Investment Platforms. Advanced proposals for Investment Platforms can also apply directly to the EIB Group for EFSI financing.
Why are Investment Platforms supported by EFSI useful?
Investment Platforms can attract and crowd-in relatively large budgets, making it easier for public and private investors to fill market gaps and finance groups of smaller and riskier projects.
Risks can then be shared by investing in portfolios of projects that are financed from different sources. This can also include creating new forms of cooperation between key financial organisations like National Promotional Banks / Institutions (NPBIs), commercial banks, investment funds and the EIB Group.
Finally, the Investment Platforms’ flexibility allows them to adapt to a range of markets, partners and policy objectives.
How are Investment Platforms being used?
Each Investment Platform is designed flexibly to fit with its particular market situation and partnership arrangement.
Three broad categories of Investment Platform currently operate:
- A dedicated vehicle with an own management structure and investment strategy. Existing Investment Platforms in this category focus on transport, broadband, business, and climate / energy efficiency themes.
- A co-financing agreement between the EIB and a financial partner. Currently such Investment Platforms finance social housing, infrastructure, and corporates.
- A risk-sharing model with financial partners. Risk is shared through a partial or full delegation of risk assessment over a projects portfolio. Housing, climate and mid-caps are being targeted by such Investment Platforms.
European Structural and Investment Funds (ESIF) can also be used within Investment Platforms. Combinations of EFSI with ESIF fall under both the EFSI Regulation No 2015/1017 and the Common Provisions Regulation No 1303/2013. Such EFSI / ESIF combinations have recently been made easier thanks to adoption of the so-called Omnibus Regulation.
Design factors for Investment Platforms
Investment Platforms are not set up by EIB, but by sponsors or project promoters, which may be public authorities, NPBIs, social sector players, or private stakeholders. These stakeholders are the “Investment Platform Sponsors” who lead the design and set-up process of the Investment Platform in partnership with EIB, and where needed this design and set-up process can be supported by the Advisory Hub.
Investment Platforms:
- Are flexible tools, adaptable to different market needs, intermediaries and geographies;
- Can combine EFSI with ESIF funding as well as national or regional support;
- Can foster new ways of collaboration between the EIB Group and NPBIs;
- Need thorough analysis of their target markets and careful structuring; and
- Can receive assistance from the Advisory Hub for their design, set-up, implementation and winding-up; but
- Are not magic tools able to transform non-bankable projects into bankable projects.
The Hub’s Technical Assistance for Investment Platforms
The Hub can help Investment Platforms promoters:
- Assess the rationale and potential to develop an Investment Platform;
- Raise awareness of Investment Platform opportunities;
- Structure the combinations of various funding sources (EFSI, ESIF, and other public and/or private funding sources); and
- Support the development of underlying projects and project pipelines.
Here are the steps to create an Investment Platform. The Hub can support the promoters in Steps 1 to 3.
More details on the steps necessary for the set-up of an Investment Platform are presented in this publication of the European Commission:
The Hub currently supports the design and set-up of Investment Platforms in Belgium, Bulgaria, Croatia, France, Greece, Hungary, Italy, the Netherlands, Malta, Portugal, Romania, Slovakia, Spain, and Sweden.
For instance, the Hub provides advisory services for:
- The Bulgaria’s urban development Investment Platform where the Hub helps Bulgaria’s national Fund of Funds to structure an Investment Platform combining EFSI with ESIF for Integrated Urban Development Plans. Resulting synergies would allow financial investments across a larger pipeline of projects totalling circa. EUR 360 million. Watch the video case study.
- A Hungarian Investment Platform for SMEs and “Smart Cities” sectors where the Hub supports the NPBI for exploring options regarding “off balance sheet” structures and integrating ESIF reflows with EIB financing.
- Smart Finance for Smart Buildings (SFSB) which is an EU-wide initiative aiming to finance energy efficiency projects in buildings. It leverages EFSI under Investment Platform structures and aims to blend various sources of funding, including ESIF. The Hub undertook initial pilot actions in France, Malta, Romania, and Spain. The Hub is also conducting a study regarding ratings for loans devoted to energy efficiency projects and has developed a guidance note for Energy Performance Contracts for public buildings renovation through ESCOs (Energy Service Companies). This guidance note is available here.
Investment Platforms in practice
As of June 2018, 41 Investment Platforms have been approved by the EFSI Investment Committee. They are expected to mobilise over EUR 34.8 billion in investments. In addition to three pan-European Investment Platforms, including the Connecting Europe Broadband Fund (CEBF) and the Marguerite Fund, they span 11 Member States – Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Poland, Spain and Portugal – and cover a range of sectors, including digital, environment, transport and energy, with a strong focus on small and medium sized enterprises (SMEs) and mid-cap companies.
- The Ginkgo Fund II is an Investment Platform providing equity financing for environment and resource efficiency investments in Belgium and France aimed to encourage urban renewal and regenerate brownfield industrial sites. The EIB contributed EUR 30 million in equity backed by EFSI and the Fund is expected to mobilise over EUR 160 million in total investments from private and public investors, including two NPBIs ( the French “Caisse des Dépôts et Consignations” and the Belgian “Société Fédérale de Participations et d’Investissement”). Watch this video.
- Cap Troisième Révolution Industrielle is a French regional Investment Platform combining financing from the EIB under the EFSI guarantee (EUR 20 million), from ESIF (EUR 15 million from the Hauts-de-France Region), and from private investors (a regional commercial bank and an insurance company together for EUR 8 million) which aims to finance SMEs and mid-caps operating in the energy and resource efficiency sector, and so contributes to the regional “Troisième Révolution Industrielle” (Third Industrial Revolution) roadmap – targeting zero carbon emission in the region by 2050. Watch the video case study.
- The Poland Social & Affordable Housing Programme represents nearly EUR 500 million of investment in housing improvements planned until 2021 and includes an Investment Platform managed by the Polish NPBI (BGK) that benefits from an EIB loan of EUR 94 million backed by EFSI. Watch this video to know more about how the Hub supported this Programme.
- The risk sharing “French Overseas Territories Development” Investment Platform managed by the French NPBI “Agence Française de Dévelopement” finances multi-sector investments in the French EU and non-EU Overseas Territories (such as tourism, urban and social infrastructure projects, housing, transport, and renewal energy projects) with an overall target investment of about EUR 1.4bn and where EIB provides a first demand EUR 180m EFSI guarantee, covering 50% of the credit risks of the projects.
More example of Investment Platforms are in this factsheet of the European Commission.
For more information
For a step-by-step guide on how to set up an Investment Platform, see:
https://ec.europa.eu/commission/publications/how-set-efsi-investment-platform_en.
For the rules applicable to Investment Platforms, see:
http://www.eib.org/attachments/general/efsi_rules_applicable_to_operations.pdf.