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EIF and HBOR invest in three equity funds in Croatia unlocking €205 million for local SMEs and MidCaps

  •  
    Date: 01 September 2020
  • EIF and HBOR will invest €70 million in three Croatian private equity funds to unlock up to €205 million for development and growth of SMEs and smaller MidCaps.
  • The joint investment  will be managed by the EIF and stems from Croatian Growth and Investment Programme (CROGIP) launched by the EIF and HBOR in 2019.
  • The investment received guarantees from the European Fund for Strategic Investments (EFSI).

The European Investment Fund (EIF) and Croatian Bank for Reconstruction and Development (HBOR) will support three private equity funds in Croatia and unlock up to €205 million of investments in growth, expansion, innovation and improved international competitiveness of local SMEs and small mid-caps.

The EIF will blend own funds with HBOR and EU funds to invest €70 million into the Prosperus Growth Fund, the Adriatic Structured Equity Fund and the Croatian Mezzanine Debt Fund. The investment will narrow a substantial market gap for alternative funding sources for SMEs and mid-caps in Croatia and expand financing options available to local companies as they recover from the Covid-19 pandemic. 

The operation stems from the €80 million-strong Croatian Growth and Investment Programme (CROGIP), launched by the EIF and HBOR in 2019 and delivers on CROGIPs founding pledge to diversify financing options for Croatian SMEs and midcaps and support development of the national private equity ecosystem.

The average size of investment ticket available is expected to range between two and eight million euros.

Alain Godard, Chief Executive of the EIF said: “It’s a great pleasure to see our partnership with HBOR trough CROGIP delivering on its pledge to create additional sources of financing for Croatian SMEs and midcaps, further modernize financial market in Croatia and level it up with the EU standards. This is just one of the examples of how EIFs cooperation with HBOR transforms Croatia into an even better place to do business, and I am proud of the EIF`s growing role in this process. We look forward continuing as one of the key facilitators of Croatia`s sustainable development, especially supporting SMEs and MidCaps recover faster from Covid-19 pandemic.”

European Commission Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “The European Commission and the European Investment Bank Group continue to help small and medium-sized companies face the devastating socio-economic effects of the coronavirus crisis. The more we protect businesses and jobs now, the faster the economic recovery will be. Today’s agreement will make a big difference to many companies in Croatia, both SMEs and mid-caps, by making more than EUR 200 million in fresh financing available to them at this challenging time.”

Tamara Perko, President of HBOR’s Management Board, said: “It makes us very proud that HBOR took part in the establishment of the funds, through which entrepreneurs will have an alternative form of financing. Since the private equity market in Croatia is still underdeveloped, HBOR initiated a number of activities for promoting the development of this form of financing. With HBOR's support, a venture capital fund intended for start-ups began to operate last year (FRC2 Croatia Partners). With the establishment of these three funds, alternative forms of financing will be made possible from this autumn onwards for more mature companies as well, regardless of the sector they operate in.”

Today’s agreement will also help Croatia improve its position in terms of share of private equity investment in gross domestic product (GDP).

The EIF-HBOR cooperation will improve financing options for Croatian SMEs and midcaps, and modernize local financial market. It will introduce alternative financing solutions, flexible transaction structures and repayment schedules and create alternative financing solutions for SMEs and MidCaps under more flexible transaction structures and repayment schedules, all key prerequisites for sustainable economic growth and development.

The operation introduces three new private equity funds to Croatian financial market and blends resources from CROGIP, the EIF and the European Union`s European Fund for Strategic Investments (EFSI), the core of the Investment Plan for Europe.

 

Background information:

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 businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

 

About Croatia Growth and Investment Programme (CROGIP):

The European Investment Fund (EIF) and HBOR launched CROGIP in 2019 initially as a €70 million-investment programme to support fast-growing SMEs and mid-caps established and operating in Croatia. The program was later expanded to €80 million in 2020. CROGIP targets co-investments and primary fund investments in private equity funds. The EIF and HBOR each committed €40 million to finance this jointly developed programme which is expected to catalyse additional private-sector investments into equity funds.

A key programme objective is to support the emergence of fund managers, which focus a significant part of their investments into Croatian SMEs and midcaps. The EIF manages the program through fund investments and co-investments into target companies. The programme is not restricted to any particular sector. The investment programme will also seek to support emerging teams established in Croatia and specifically focused on the country.

CROGIP is a financing programme launched by the EIF under the EIF-NPI Equity Platform, of which both EIF and HBOR are founding members, and the Investment Plan for Europe, in cooperation with EU National Promotional Institutions.

 

About the European Fund for Strategic Investments (EFSI):

The European Fund for Strategic Investments (EFSI) is the main pillar of the Investment Plan for Europe. It provides first loss guarantees enabling the EIB to invest in more, often riskier projects. The projects and agreements approved for financing under EFSI are expected to mobilise €514 bn in investment, supporting over 1.4 million start-ups and SMEs across the EU.

 

Press contacts:

EIB Group:  Tibor Jona, E-mail: t.jona@eib.org, tel.: +352 691 287 052

Website: Website: www.eib.org/press - Press Office: +352 4379 21000 – press@eib.org

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