Benjamin Angel: ‘Speed-dating’ EU investment

Benjamin Angel [ekspertai.eu]

The European Commission is getting ready to launch a “speed-dating” website that should help match investors with project promoters from all around Europe.

EURACTIV Czech Republic talked to DG ECFIN’s director Benjamin Angel about details of the new platform but also some other lesser-known parts of Juncker Investment Plan.

Benjamin Angel is in charge of coordination with the EIB Group, EBRD and IFIs at DG ECFIN. He was responsible for the design and policy issues related to the sovereign rescue instruments for the euro area and member states, including the Juncker Plan.

Angel was interviewed by EURACTIV Czech Republic’s Publisher, Jan Vitásek.

You are the man behind the components that make up the Juncker Plan, also known as the European Fund for Strategic Investment (EFSI). Can you give us an overview of what is inside, and how it is expected to work?

There are three pillars. The first one is the EFSI, which is basically an EU guarantee to the EIB Group that allows the European Investment bank (EIB) to take more risk, so that it can invest more and differently than before, and the European Investment Fund (EIF) to expand its activities towards SMEs.

The second pillar is about facilitating that the investment reaches the real economy. This is structured into two sub-pillars. First, we are building a European Investment Project Portal (EIPP), which is some kind of gigantic speed-dating website between investors and project promoters all around Europe, that aims at smoothening the information flow on the market.

The other part of the second pillar, the European Investment Advisory Hub (EIAH), is a boost of technical assistance for project promoters that need it to originate projects. EIAH is both a central access point to technical assistance, and an enhanced capacity to support projects. It can also guide the project promoter in the jungle of possibilities. Sometimes we have good instruments that people do not use because they do not understand how they work.

The third pillar of the plan is probably the most important. It is about improving regulatory environment. When you look at the World Bank annual ranking of countries according to the easiness to do business, one can see that the situation differs from country to country. We have EU countries which are amongst the best performers, and EU countries that are amongst the worst. The EU on average does not rank that well. We need to pay more attention to that, with a view to enhancing our competitiveness.

Can you explain a bit more how the “speed-dating website” for investors is expected to look like?

The EIPP will be the website where project promoters looking for investors will put in a standardised way a description of their project and where investors looking for investment opportunities will be able to spot them instantly from an EU clickable map, or a sector database investment opportunities all over Europe.

What kind of projects will be eligible to be posted on that platform?

The criteria are quite simple: The project needs to be of at least €10 million EUR, it needs to start within the next three years, and last but not least, it has to be compatible with European and national legislation.

€10 million quite a lot of money for a country of our size.

It is true that for small countries, it is a lot of money. But at the same time, you have to keep in mind that some other players, like the EIB do not usually look at projects below 25 million EUR.

To be honest with you, one of the reasons why we had to come up with this threshold was the reluctance of member states to be directly involved in the management of the EIPP. The Commission has to do it fully by itself. We will have thousands of projects to scrutinize, and therefore had to set a level which is manageable. Once we get more experience and comfort in operating the EIPP, we may be able to lower this threshold. It’s a starting point.

As another criterion for eligibility, you mentioned the legality of the project. How would you deal with situations when a project is legal according to national law, but may not qualify under EU law?

When the Commission receives the project, it will share it with all the services concerned and the services, since they know them well. They will check whether the project is compatible with EU law. If not, it will never appear on the portal and we will inform the promoter about the problem.

Obviously, the Commission cannot check compatibility with national legislation. No one in Brussels can claim a knowledge of each and every law in each and every member state. For this part, we need member states to participate. Some member states intend to do it and to check the projects we will receive, some other not. In any case, the project promoter will have to sign a document where he will certify the compatibility of the project with the law. He is the one taking the responsibility.

We provide a tool, but the responsibility for the projects in the pipeline belongs to the promoter.

Who do you expect to be an investor for projects posted at the EIPP?

It can be absolutely any entity. If you are a project promoter and still have a financial gap when finalizing your tour de table, you can approach the portal, give a description, explain how much you already have, how much is missing and investors looking for investment opportunities might contact you directly.

It is not a tool for making submission for grants or EU funds: you have dedicated processes to do so. But it is quite certain that some public investors within and outside the EU will look at it. We are in regular contact for instance with the Chinese. They are really looking for investment opportunities in Europe, and they are very interested in the EIPP. The EIB itself has to generate a lot of projects because of EFSI. It will certainly have a regular look at its content, to see whether there are some interesting projects it is not already aware of.

You mentioned the Chinese. Are there any other global investors that indicated their interest in the EIPP?

Actually, it does create a worldwide interest. Recently, we even had to present it at a working group of the G20 since a discussion started on creating some kind of global information portal on investment. We are the ones showing the lead. If it works well in the EU, I am sure it will create copycats in some other parts of the world.

Am I correct that projects may obtain practically whatever type of support investors are willing to use (loans, equity, etc.)?

It is for the project promoter to explain what he is looking after. We do not interfere in the financial construction of the project itself.

Do you see any hesitation from potential project promoters?

What a visitor to the portal will see is a broad description of a project, not each and every detail. If some investors want to know more, they can get in touch with the project promoter by clicking on the project. So we do not expect project promoters to disclose any confidential information.

Investors will not be able to see instantly how much each promoter is seeking to raise?

Promoters should definitely give some indications of the total target investment they need for a start.

But the EIPP is an extremely cheap tool to bring publicity to the project, especially now, during this pre-launch period where the fee is only €100.

What is the current situation?

We are still in the stage where have to gather a critical mass of projects. We will not go online until we have at least 300 or 400 of projects since the first contact of investors with the portal will be key in whether they will use the portal afterwards. If they find only 20-50 projects not that interesting, they will not look at it anymore.

Is there any sector where the amount of projects you already obtained is well above the average?

Energy. But there is no real limitation in terms of sectors covered, except for defense. Anyway, we do not expect to have someone trying to raise money for financing a new missile through the project portal!

Let us move to a second supporting tool, to the European Investment Advisory Hub (EIAH). I understand that it is a tool that should help project promoters.

Firstly, EIAH is a single point of access to technical assistance in Europe.

Today, we have a lot of technical assistance programmes spread among various instruments which makes it very difficult for the outsider to know on which door to knock. Here, it is a single door.

Secondly, we want to provide help, even if the EU funds are not used at all.

Project promoters from wherever they are should be able to get support for their project.

Let’s say I have a project, and come to the EIAH website. How do I proceed?

You send an email. You will get a quick reaction. The teams will contact you to learn more about the project with a view to understanding better what your needs are. If you are looking for financial support, they will explain to you what kind of support you are likely to obtain and whom you should contact. But the primary task of EIAH is naturally to provide technical assistance.

The last part of the Juncker plan is about regulatory environment. What are your intentions?

The Commission is doing a systematic effort to improve the situation via a number of initiatives. There is, for instance, a proposal to create a new infrastructure asset class under Solvency II for the insurance sector, which would help them to invest in infrastructure with a lower capital cost.

When you compare the EU and the US, it is quite striking that in the US, one third of the financing of the economy is done via banks while in the EU it is two third. It is not a problem when banks are fine, but it becomes a problem when banks are in a bad shape since the whole economy freezes.

Our aim is to diversify the sources of financing and to facilitate the access of SMEs to market financing. For instance, the Commission has already proposed changes to the Prospectus Directive to make it much easier for SMEs to prepare prospectus when they try to tap the market. We are also taking steps for generalizing credit registers for SMEs and are also trying to revive securitization. In Europe, it has suffered from the bad image attached to the securitisation crisis that people experienced in the US, even though Europe has experienced an extremely low default rate.

But the effort goes well beyond these initiatives, that are connected to the Capital Market Union. As you know, the Commission is also working on an Energy Union or a Digital Single Market. We really want to address the obstacles to investment in every possible sector.

How long has it been since the EU started to talk about a need for venture capital financing?

Under the EFSI, we are about to launch a new initiative to support venture capital. There will be a €1 billion equity platform focusing on the early stages of SME life, launched this year, and we are also about to launch a €500 million fund for funds specialized in venture capital.

 

Subscribe to our newsletters

Subscribe