ESIF Fund of Funds of EUR 253 million set up to deploy financial instruments
Ljubljana, 23 November 2017 – Government Office for Development and European Cohesion Policy, the Managing Authority for ERDF, ESF and Cohesion Fund today issued a grant decision which marks the kick-start of financial instruments’ deployment in Slovenia. EUR 253 million has been ring-fenced for financial instruments in the 2014-2020 round of funding which will be managed as a Fund of Funds by the SID Bank. Financial instruments play an important role in delivering development policies across EU, encourage ESIF investments and facilitate access to debt and equity financing. Slovenia intends to concentrate this financial support on RDI, SMEs, energy efficiency and urban development in line with the Operational Programme for the Implementation of EU Cohesion Policy in the Period 2014-2020.
The implementation of financial instruments in Slovenia will include two stages - financial instruments operations will be implemented through a Fund of Funds that will be managed by the SID Bank. The resources will then be transmitted to selected financial intermediaries - financial institutions, public funds or providers of risk capital which will provide support to final recipients in the form of loans under favourable conditions (including microcredit) and risk capital.
The implementation option that involves a single Fund of Funds and specific thematic sub-funds offers a number of advantages, including a single management structure, economies of scale, increased cost-effectiveness, etc. The manager of the Fund of Funds will launch competitive procedures to select intermediaries (banks, savings institutions, public funds, etc.) that will provide access to financial products (lower interest rates, reduced collateral requirements, grace periods, longer repayment periods, etc.) to final recipients.
Final recipients, i.e. SMEs, institutes, municipalities, ESCO companies (energy renovation) and individuals will be able to access financial support under favourable conditions for the following types of development investment:
- business start-up and early business growth stage,
- business growth and expansion (expansion of business services and activities,
- penetration to new markets, etc.),
- R&D projects and R&D-related investment,
- energy renovation of the public building stock,
- investment in brownfield regeneration in urban municipalities.
Financial instruments represent a paradigm shift in development policy and funding and have been designed to increase the take-up by Member States of revolving financial support rather than traditional grant-based financing – ‘’free money’’ (i.e. subsidies and public investment). The projects supported by financial instruments generate cash flows that secure repayment of resources to the fund, these resources can further be unlocked for reinvestment in other projects.