-The European Investment Bank signs two new operations on the day of its annual results press conference in Sofia:
-a €18m loan to Software Group supported by the Juncker Plan - the EIB’s first venture debt operation in Bulgaria
-a €20m loan to Raiffeisen Leasing, for investments in small and medium-sized companies
-In 2018 EIB Group support in Bulgaria amounted to €217m, including:
-€103m of loans signed by the EIB, and
-€114m committed by the EIF for eight operations, mobilising €228m of investments
The loan to Software Group - a global technology company helping financial service providers digitise their business and successfully go through the process of digital transformation - is the first transaction with venture debt features in Bulgaria. The operation provides direct support to the company and is backed by a guarantee from the European Fund for Strategic Investments (EFSI), a key component of the Investment Plan for Europe. EIB financing will facilitate the execution of Software Group’s R&D strategy and strengthen its global reach.
The intermediated loan agreement with Raiffeisen Leasing Bulgaria represents the second tranche of a €50m loan. It will finance projects by some 300 small and medium-sized companies, supporting at least 8,000 jobs in the country.
European Commissioner for Digital Economy and Society Mariya Gabriel said:” “With €43bn of additional investment mobilised for the digital sector, the Juncker Plan is supporting European businesses embrace and efficiently succeed the process of digital transformation. I welcome the two new operations, especially the focus on SMEs. I call on other companies in Bulgaria and elsewhere to follow suit and seize all opportunities.”
EIB Vice-President Vazil Hudák commented: “We had a strong showing in Bulgaria in 2018, especially with the roll-out of our advisory services, and we are continuing to support the economy in the new year with two important transactions. EIB Group financing represented some 0.4% of Bulgaria’s GDP last year, above EU average, while advisory services rendered facilitated the implementation of projects worth some EUR 2bn, confirming that the Bank has an important role to play in the country.”
Deputy Minister of Finance Marinela Petrova stated: “We welcome the EIB commitment to develop innovative financial instruments to address the investment gaps and to provide innovative, pragmatic and efficient solutions to further catalyse investment in the EU. We will rely in the future on this commitment and the ability of the EIB to work with the Bulgarian authorities and businesses on initiatives addressing the needs of our economy.
Dobromir Dobrev, Deputy CEO of Raiffeisenbank (Bulgaria), responsible for corporate banking, capital markets and the leasing company, said: “Thanks to our long partnership with the EIB we are able to provide sustainable support for the Bulgarian business. So far, the Raiffeisenbank Group in Bulgaria and the EIB have signed agreements for €180 million for the bank and the leasing company. Under the new credit line from the EIB, through Raiffeisen Leasing Bulgaria, we will provide new leasing financing for a wide scope of customers for purchase of equipment, trucks and trailers, light commercial vehicles and passenger car fleets, etc. All this will support the investment plans of the Bulgarian companies and will also increase their competitiveness.”
CEO of Software Group Kalin Radev commented: „We are proud to be the first company in Bulgaria that successfully completed the procedure for receiving a venture debt by EIB. The funding will support our ambitious business goals and our plan for development in the next three years. We will invest in innovations, attracting top talents, entering new business areas while continuing the steady growth of the company”
EIB Group results in Bulgaria in 2018
Support to corporates to foster strategic infrastructure
In 2018, the EIB provided a loan of €14m to Agria Group Holding AD to finance the construction of a new port facility close to the Port of Varna for the storage, handling and export of grain, vegetable oils and sunflower meal in the area of Beloslav. This project contributes to the development of a comprehensive trans-European transport network node by improving the capacity and efficiency of the associated supply chain. It supports sustainable transport by promoting sea transport as an alternative to other, carbon intensive transport modes, and fosters sustainable economic growth and development of a less developed region.
Fostering the development of municipal infrastructure
The EU bank also provided two loans to Sofia Municipality:
-€22m for the construction of the second stage of Sofia Metro Line 3. This project involves a twin-track metro line 3.8 km long, four metro stations, and a railway stop for connection to the national railway network. The new metro line will increase public transport passenger capacity, encourage a modal shift towards more environmentally-friendly transport and reduce congestion on the existing transport network;
-€67m to support the construction and commissioning of a new combined heat and power plant for Sofia's district heating network operated by Toplofikacia. The new cogeneration plant is designed to process daily more than 100t of refuse-derived fuel from a mechanical biological treatment plant in Sofia.
Support for SMEs and mid-caps
Following a record-breaking year, the EIF continued to support SMEs in Bulgaria by committing a total of €78m in 2018 via four new guarantee operations and one new venture capital fund aimed at providing debt and equity financing of €168m in total.
Overall in 2018, through EIF operations in Bulgaria more than 3,000 small and medium-sized companies received financing worth approximately €408m.
Last year, given the successful implementation of the JEREMIE Initiative, the EIF and the Bulgarian Ministry of Economy agreed to launch two new financial instruments with reflows generated from JEREMIE operations. The Documentary Finance Guarantee facility will use up to €30m of reflows for new trade finance guarantees to support the internationalisation and diversification of the Bulgarian economy with a total loan volume estimated to reach €200m. The InvestBG Equity programme will use JEREMIE reflows and EIF own resources to commit up to €110m in venture capital and private equity funds investing in Bulgaria and direct equity co-investments in Bulgarian companies. The first operations under the Documentary Finance Guarantee facility and the InvestBG Equity programme are expected to be launched in 2019.
EIB advisory services in Bulgaria
Bulgaria is one of the largest beneficiaries of EIB’s advisory services. Since 2006 JASPERS has supported the completion of numerous Bulgarian investment projects with total project costs of over €5.5bn on 30 major projects, with around €3.9bn of European Commission grants mobilised. In addition to projects already completed, JASPERS currently has 28 active advisory and capacity building assignments in Bulgaria.
In 2018, four large investment projects with JASPERS support were approved by the Commission for a total investment of €1.23bn, and a grant amount of €882m. JASPERS was also very active in finalising advisory support for the preparation of the Natural Gas Interconnector between Greece and Bulgaria, with total costs of around €240m.
The EIB’s Project Advisory Support Unit (PASU) provides flexible and targeted project advisory support to Member States. It is financed by EU funds and aims to improve the rate and quality of absorption of European Structural and Investment Funds (ESIF) through better management, leveraging and performance of investment. In Bulgaria it focuses on project delivery and implementation support, the preparation of strategic documents and institutional capacity building.
The European Investment Advisory Hub (EIAH) is a partnership between the EIB and the European Commission, and a single point of entry to a comprehensive package of advisory and technical assistance. Until the end of 2018, the Hub processed 79 advisory requests from Bulgaria, ranging from information enquiries to requests for technical assistance, funding, or both. Of these, 65 requests were project-specific, 35 came from the private sector and 10 qualified for comprehensive advisory assistance.
In association with Financial Instruments Advisory (FIA), a specific EIAH Advisory Services Agreement was signed in August 2017 to structure and develop a Bulgarian urban investment platform. Under this framework, FIA is providing support to the Bulgarian Fund of Funds (FoF) to develop their ESIF-based urban development financial instruments (FIs). This support was provided in relation to soft market testing in the banking sector and the selection of FI managers. Agreements between the FoF and the selected FI managers were signed in September 2018, enabling the three Urban Development Funds to start operations.
InnovFin Advisory (IFA), a joint EIB-EC initiative under Horizon 2020, aims to improve project bankability and provides non-project-specific strategic studies related to access-to-finance challenges faced by RDI investments. IFA is currently providing project advisory in relation to investments in display hardware and software development worth EUR 30m, with a view to identifying suitable funding options, including debt financing or venture capital.
The European Investment Bank (EIB) is the European Union's bank. It is the long-term lending institution of the EU and is the only bank owned by and representing the interests of the European Union Member States. It makes long-term finance available for sound investments in order to contribute towards EU policy goals. The EIB works closely with other EU institutions to implement EU policy. As the largest multilateral borrower and lender by volume, the EIB provides finance and expertise for sound and sustainable investment projects which contribute to furthering EU policy objectives. More than 90% of EIB activity is focused on Europe but the Bank also supports the EU's external and development policies.
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
Investment Plan for Europe
The Investment Plan for Europe (the Juncker Plan) is one of the EU's key actions to boost investment in Europe, thereby creating jobs and fostering growth. To this end, smarter use will be made of new and existing financial resources. The EIB Group is playing a vital role in this investment plan. With guarantees from the European Fund for Strategic Investments (EFSI), the EIB and the European Investment Fund (EIF) are able to take on a higher share of the risk in projects, encouraging private investors to participate in these projects. EFSI was initially intended to mobilise investment of €315bn throughout the EU over a period of three years until mid-2018. In December 2017, the European Parliament and the EU Member States reached an agreement to extend the duration of EFSI to 2020 and increase its financial capacity to €500bn. In addition to EFSI, the new EIAH advisory platform helps public and private sector project promoters to structure investment projects more professionally. The Investment Plan also improves the investment environment in Europe.
As of March 2019, the Juncker Plan was expected to mobilise close to €380bn of additional investments, including over €1.8bn in Bulgaria. Some 842,000 small and medium-sized businesses all over Europe are expected to benefit from improved access to finance.