The European Guarantee Fund, which started operations in December 2020, has reached €16 billion in approved financing at the end of June. This represents over 65% of the available € 24.4 billion in EU Member States’ guarantees to support financing to European businesses struggling after the economic downturn. Total signatures with beneficiaries of financing under the EGF stood at €8.4 billion, mostly benefitting SMEs.
The pan-European guarantee fund, part of the €540 billion EU recovery package approved in 2020, is expected to mobilize up to €200 billion for EU businesses and the wider economy.
“The EGF is there to support EU companies and provide the financing they need to grow their way out of the pandemic. As a Group, the EIB and EIF are firmly on track in delivering on the promises of this recovery initiative, to mobilize up to €200 billion of financing in one year. Now, halfway through the year, we have already approved 65% of the target size of the guarantee fund, and the money is reaching the real economy,” EIB Vice-President Ambroise Fayolle, who has taken over as Chairman of the EGF Contributors’ Committee, stated.
Demand for EGF financing remains strong for both loan guarantees and venture capital, and EGF agreements have been signed-in all 22 participating EU countries. Sizeable transactions were signed recently in Italy, Finland, and France, keeping the EGF on track to mobilize investments worth up to 8 times the fund’s size of €24.4 billion by the end of 2021. The initiative is expected to reach three-quarters of its target by early autumn.
The first venture capital deals were signed in Spain, Lithuania, and Belgium. Some 7% of EGF is aimed at financing venture capital projects.
“Although economies around the EU are starting to recover, a lot of financing will still be needed along the way, and the EIB Group is there to make this available. We have been working flat-out for months now to get this financing to the markets as swiftly as possible,” said European Investment Fund Chief Executive Alain Godard.
“Today we can say that the initiative we came up with at the start of the pandemic is really working,” Godard added, “thanks also to the unrelenting support of the participating Member States. They are helping us make much-needed support available to small and medium companies around Europe.”
