The European Investment Fund is helping to facilitate investments in Portuguese firms targeting the energy transition, climate resilience, sustainable use of the marine environment and the circular economy.
Funding for Portuguese companies involved in the green transition has received a boost through two EU-supported initiatives in recent weeks, one providing guarantees for SME financing to drive the shift to a sustainable economy among other areas, and a private equity fund to bolster the blue economy.
Banco BPI (BPI), Portugal’s fourth largest bank, signed an agreement with the European Investment Fund (EIF), under which EIF will provide guarantees for up to €155 million in loans for Portuguese SMEs. The agreement is backed by the InvestEU. EIF is the venture capital arm of the European Investment Bank, while InvestEU is an EU vehicle for funding its policy priorities, such as the European Green Deal and the digital transition.
The financing will target sustainability, the cultural and creative sectors, and innovation and digitalisation.
Up to around €69m of the total will be directed towards green investments, with companies benefitting from reduced interest rates and collateral requirements. Areas covered include decarbonisation, renewable energy, energy efficiency, zero and low emission mobility, climate resilience and the circular economy.
BPI will also provide up to €29m of debt finance to entrepreneurs, and other private and public sector enterprises operating in cultural and creative areas via support from the EIF backed by InvestEU. Themes covered here include filmmaking, music, festivals, museums, and radio among others.
Finally, BPI will provide financing up to around €57m under InvestEU to support companies investing in digitalisation and innovation, for example through research and development, and adoption of new technologies.
“One of the EIF’s main priorities is ensuring the competitiveness of European SMEs that are driving the green and digital transition,” Roger Havenith, the fund’s deputy chief executive, said.
Such financing reflects the need to support green tech in an increasingly competitive global business environment, made that much tougher by the US government’s introduction of legislation – the prosaically named Inflation Reduction Act – that incentivises homegrown clean tech businesses. The EU, which unveiled details of its own green deal for industry unveiled in February, must respond if its own businesses are to remain competitive.
Private equity fund targets blue economy
Another recently launched tranche of EU support for Portugal is in Growth Blue I, a €28m blue economy-focused private equity fund, which is the first of its kind in southern Europe, according to EIF.
The fund is the product of Portugal Blue, a partnership between the EIF, Banco Português de Fomento (BPF) and the Portuguese government, focused on blue economy investments with climate impact and sustainable development goals. InvestEU is a co-investor through its new Blue Economy instrument, a dedicated equity fund.
The Growth Blue Fund is to invest in SMEs and small mid-caps, mainly based in Portugal and Spain, with the aim of promoting international growth of mature blue economy companies that focus on sustainability and climate action. The fund hopes to raise a total of €50m, including private commitments from institutional investors.
The team is currently screening the first of the 12 companies with equity and quasi-equity ticket sizes above €1.5m that the fund plans to invest in. Of interest are companies operating in seafood, offshore energy, shipping, ports and marine biotechnology that contributes to decarbonisation, reduction of ocean contamination and marine ecosystem conservation.
As with the Banco BPI guarantee agreement, the Growth Blue fund is intended is to improve the competitiveness of companies on the international stage. It is the second fund under Portugal Blue. The first targeted start-ups based on innovative technology solutions with a positive impact on ocean sustainability and climate action.
Portuguese-based Growth Partners Capital (GPC) is the fund’s manager. Miguel Herédia, founding partner at GPC, said Growth Blue provided the opportunity to show it was possible to achieve economic growth and financial returns, at the same time as making a positive impact.
“Having secured EIF and Portugal Blue as an anchor-investors was game changing to us as it gives us additional credibility, having been critical to kick-off the fund and to attract private investors,” he said.
The EIF is a key backer of the EU’s BlueInvest initiative to propagate blue economy technologies and also recently committed €30m to the European Climate Debt Solutions Fund (EUCLIDES) to invest in innovative climate solutions providers across Europe through tailor-made debt instruments.