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Fundraising - JUNE 12, 2019

New fund to supplement EU infrastructure project financing

by Released

Polish and Romanian state-owned banks have established the “Three Seas Initiative Investment Fund”, which will help finance infrastructure projects in countries likely to receive reduced EU funding.

Poland’s national development bank, Bank Gospodarstwa Krajowego (BGK), and Romania’s export-import EximBank signed an incorporation agreement for the fund, which will operate under Luxembourg law on a commercial basis. It will focus on transport, energy and digital infrastructure projects in the Three Seas region.

The Three Seas Initiative has 12 members: Austria, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. Most of these countries have benefited since their accession into the EU from considerable European Structural and Investment Funds.

However, partly due to Brexit, the EU is expected to reduce the size of this funding in the next funding round post-2020.

The Three Seas Initiative Investment Fund will support and supplement the EU programs and also will strengthen the competitiveness of the EU itself, EximBank says in a note seen by Kallanish, sister publication of Kallanish Energy.

The fund’s resources will come from various sources. The two banks that established the fund have made investment commitments, with the total presently exceeding €500 million ($565 million).

The fund is now open for other Three Seas countries to join once the necessary permits are obtained. Additional investors will be targeted among pension funds, private equity funds, private investors and others. The estimated objective of the fund is to raise €3 billion to €5 billion ($3.9 billion – $5.65 billion).

The plan is for the fund to engage in infrastructure projects with a total value up to €100 billion ($113 billion), while the needs in the Three Seas region have been estimated at more than €570 billion ($644.10 billion).

 

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