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Vækstfonden draws DKK 1.2 bln from European Guarantee Fund for Danish SMEs

  •  
    Date: 27 April 2021
  • Vækstfonden draws DKK 1.2 billion framework guarantee from European Guarantee Fund (EGF)
  • EGF is part of the EU’s €540 billion COVID-response package agreed last year.
  • This deal will allow Danish companies affected by Corona crisis to benefit from EU crisis fund.

The Danish national promotional institution Vaekstfonden has signed a DKK 1.2 billion guarantee agreement with the European Investment Fund (EIF). The new agreement, which falls under the “European Guarantee Fund”, ensures that more Danish companies will be able to benefit from new EU-financing on more favourable terms.. The guarantee covers 70% and thus ensures Danish companies will have the necessary financing recover from the COVID-19 crisis well.

Rolf Kjærgaard, CEO of Vækstfonden: “The corona crisis has created great uncertainty and concerns for Danish business owners. For some, the global customers may have disappeared, and tourists have been absent, combined with the fact that many Danes may have been inclined to spend less over the last year. Therefore, it is great that we have this guarantee agreement with the EIF, so that we can get more capital to work for the economy. It is a really good opportunity for Danish companies.

We’re very happy to partner with Vaekstfonden for this transaction under the European Guarantee Fund.” said EIF Chief Executive Alain Godard. “The EGF is a pan-European tool, part of the EU’s recovery package, that will allow us to significantly increase our support for small businesses, in Denmark and other EU member states. Businesses, especially the smaller ones, have suffered massively over the last year and we’re glad that we can build on our long-stading partnership with Vaekstfonden to channel much needed financing to them.”

EIB Group Vice-President Christian Kettel Thomsen added: “Just like the virus does not know borders, neither should the financing for the recovery from the economic fallout. The Pan-European Guarantee Fund that the EIB Group established with EU Member States is active and relevant throughout the Union, and we’re glad that Danish SMEs will also be able to benefit from this financing through this collaboration with Vaekstfonden.”

The high guarantee coverage means that Vaekstfonden significantly reduces the risk for the final beneficiaries via the EU crisis fund, which gives financial intermediaries even better opportunities to provide loans to Danish companies that need to make investments to recover from the crisis. “The money is greatly needed as society begins to open up”, says RolfKjærgaard. “Since March 2020, the crisis has eroded the reserves of Danish companies. Many have a strong desire to launch new investment projects that can provide them with a strong foundation in the reboot after Corona. These are the kinds of projects that I hope our loan products and the EIF crisis fund can contribute to: Renovation of the café or hotel, expansion of production facilities and much more.

The European Guarantee Fund was founded by the European Investment Bank Group (comprising the EIB and the EIF) and EU Member States to ensure that SMEs with sustainable business plans are provided liquidity to overcome COVID-19 related adversities, and that healthy business are supported to grow.

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.

The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Denmark and other EU Member States to shield companies suffering from the economic fallout of the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion boost those parts of the EU economy that have been hit the worst. Up to the end of March, over €10,5 billion worth of projects under the EGF had been approved, expected to mobilise around €89,5 billion of the €200 billion financing target.

Vaekstfonden, the Danish Growth Fund, is an independent fund governed by an independent legal act and an independent board of directors. The act concerning Vaekstfonden stipulates that the fund must promote growth and renewal for small and medium-sized enterprises in order to achieve a greater socio-economic return. The fund contributes to the creation of new companies by providing capital and expertise. Since 1992, Vaekstfonden has co-financed growth in more than 10.000 companies with a total commitment of more than DKK 38 billion. Vaekstfonden provides loans and guarantees in collaboration with Danish financial institutions and European partners.

Press contacts:

EIB Group: Tim Smit, +352 691 286423, t.smit@eib.org

Vækstfonden: Cecilie Idun Andersen, +45 31930573, cea@vf.dk

 

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