Investment Plan By The European Commission

Increase Investments In Infrastructure – Mobilization of Private Capital

On November 26, 2014, the European Commission presented an investment plan “Invest in Europe” with the purpose of enhancing growth and employment across Europe. Part of the investment plan is the creation of a European Fund for Strategic Investments (EFSI) guaranteed for by public funds. Moreover, feasible projects need to be identified on an European level and investment constraints are to be addressed. The German Insurance Association (GDV) welcomes the initiative of the European Commission to increase the volume of infrastructure investments across the European Union through the EFSI. Thereby, private capital will be attracted and newly set-up projects will be supported.

As the EFSI should be set up most efficiently, we believe that a couple of key aspects require special attention:

  • In order to avoid crowding-out of private investments the EFSI should focus on projects that are unable to attract sufficient funding from private investors. We believe that private funding should be treated preferentially.
  • Credit enhancements will help to establish attractive risk-return profiles and protect tax payers’ money. An equivalent to the PBCE (= project bond credit enhancement) should be created for equity investments.
  • Setting the right governance for the EFSI is crucial to create trust with institutional investors. Therefore, we recommend the creation of an independent advisory committee to advise the fund’s Steering Board on the availability of alternative financing. Moreover, the EFSI should be evaluated regularly by this independent third party.

The GDV’s complete comment is available in the download section.

About “Invest in Europe”

The investment plan “Invest in Europe” by the European Commission should encourage investments across Europe in the range of 315 billion euros in the years 2015-2017. It is based on the following three pillars:

  1. The creation of an European Fund for Strategic Investment Investments (EFSI) guaranteed for by public funds
  2. The identification of feasible projects on a European level
  3. 3. A timeline to address current investment constraints

EFSI will be managed by the European Investment Bank and pursues the realisation of investment projects in infrastructure, general and professional education, research, and innovation. EU member states might participate in the fund either direct or through development banks.

>> Insurers open to dialogue on infrastructure financing


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Comments on the legislative proposal by the European Commission for the European Fund for Strategic Investments (EFSI)

PDF (80 KB)