The fund is dedicated to the enterprises from the European Union that are in trouble due to the present-day economic downturn but would be strong enough to get a loan in the absence of the crisis situation that appeared in connection with COVID-19.
By mobilizing additional funding of EUR 25 billion, the EIB aims at generating up to EUR 200 billion for the economy. In short, the EGF provides capital release guarantees to national promotional banks, local banks and other financial intermediaries in order to make more funding available to SMEs, mid-caps and large corporates.
The countries participating in the European Union provide guarantees in proportion to their participation in the EIB or other institutions. Poland declared a share of over EUR 1 billion.
Financial instruments
Within the EGF, potential financial intermediaries can use equity and debt funds and guarantee products to offer financing on better terms to SMEs and large corporates with up to 3,000 employees
EQUITY AND DEBT FUNDS-TYPE PRODUCTS
EQUITY AND DEBT FUNDS
Existing Funds Top-Up Facility Provision of additional liquidity mainly to existing equity funds in the EIF portfolio to ensure the stability and availability of capital for SMEs and midcap companies being potential investees in the context of current unfavorable market conditions, by means of additional financing by the EIF in the form of capital in additional funds or an additional financing made by the EIF in the form of senior capital through the main fund or additional funds.
Replacing Defaulting LPs Facility
Replacing a distressed limited partner who does not meet the obligation or probably will not be able to meet the obligation, who is an investor in the fund, thereby ensuring that the fund can fulfill its original investment strategy in terms of the number of SMEs and midcap companies that will receive the support and the fund will maintain the ability to carry out follow-on investments.
The target value of the fund (Fund Target Size Facility)
Support for (i) funds during the first phase (till the first closing), or (ii) funds in the onward investor solicitation phase to achieve subsequent closings and achieve the fund’s target value or appropriate fund value in the case when there is limited investor interest in connection with the crisis caused by the COVID-19 pandemic, thus enabling new investments in SMEs and mid-caps
Restructuring funds and dedicated funds for special situations
Supporting the creation of funds the strategies of which focus on restructuring and are dedicated to specific situations helping to maintain the activities of distressed SMEs and mid-cap companies by providing capital injections or equity-like measures and creating value through operational restructuring, thereby defending them from bankruptcy, preserving jobs and putting them back on a growth path
Selective loan funds
Supporting the creation of selective loan funds offering loans in the form of clean, privileged, subordinated or unitranche solutions, thereby increasing the availability of non-bank financing for SMEs and midcaps tailored to their long-term financing needs arising from the currently disadvantageous market situation.
Senior loans from private funds
Supporting (directly or indirectly) debt funds managed by established and new private fund managers that, using a portfolio diversification approach, invest primarily in the form of senior financing, asset based financing or unitranche financing for SMEs and midcap companies, thereby offering an efficient alternative source of financing and ensuring the availability of loans with longer maturities, tailored to the borrowers’ needs, with flexible collateral requirements and flexible debt repayment options.
GUARANTEE PRODUCTS UNDER THE EGF
Limited amount guarantees offered by the European Investment Fund.
The purpose of this product is to provide support to SMEs and small mid-caps, as well as social enterprises, thanks to the Limited Amount guarantees dedicated to these enterprises, increasing their access to finance by providing partial capital relief and protection against loss for portfolios of new eligible transactions as well as by refinancing their existing liabilities. Selected Financial Intermediaries will be able to take advantage of EIF guarantees on a transaction-by-transaction basis, securing defaults of up to 70%, and such guarantees will be used for eligible transactions in a given portfolio the guarantee rate of which can reach up to 30%.
Unlimited guarantees in the offer of the European Investment Fund.
Increasing access to finance for SMEs and small mid-caps by providing full capital relief and loss protection for the guaranteed portion of the portfolios of new eligible transactions, and refinancing their existing liabilities. Selected Financial Intermediaries will be able to take advantage of EIF guarantees on a transaction-by-transaction basis, securing defaults of up to 70%, and such guarantees will be provided in relation to the eligible transactions in a given portfolio.
Synthetic securitization in the offer of the European Investment Fund
Guaranteeing the first loss part and mezzanine tranches on existing portfolios (synthetic transactions) or investing (or providing guarantees to external investors) in bonds issued under securitization transactions. Following the portfolio risk transfer and capital transfer, the Financial Intermediaries will provide new financing (including in the form of a working capital loan and / or guarantee) to SMEs and small mid-caps based on the resources allocated and on the amount of capital transferred as a result of the tranche guarantee.
As of the date of the call by the EIF, applications cannot be submitted for this product. Indicative key terms and links to the application will be provided at a later stage.
Increasing access of mid capitalization companies (500 employees), large cap (up to 3000 employees) and public sector entities and other entities active in the field of health or health research or providing basic services related to the health crisis to finance by ensuring the full capital relief and loss protection for the guaranteed part of the portfolios of new eligible transactions, as well as renewals of existing liabilities. Selected Financial Intermediaries will be able to benefit from transaction-by-transaction guarantees provided by the EIB, securing defaults of up to 75%, with such guarantees being provided for the eligible transactions in a given portfolio.
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