Lithuanian national promotional institution VIVA agrees guarantee with European Investment Bank under “European Guarantee Fund” (EGF) to finance local Mid-Caps
The financing comes in the form of a link risk sharing guarantee that will support a portfolio of up to €50 million in new lending to Mid-Caps, and by extension, SMEs.
The EGF is part of the €540 billion EU emergency package for businesses and workers, agreed in the wake of the coronavirus outbreak.
In a ceremony at the Lithuanian Ministry of Finance today, the European Investment Bank (EIB) and State Investment Management Agency (VIVA) have announced new support for Lithuanian companies in the context of the Pan-European Guarantee Fund (EGF). This is the first time that portfolio guarantee under EGF will support financing for Mid- Caps and Large companies.
The signature between the EIB and VIVA regards a Linked Risk Sharing instrument to improve access to finance for Mid-Caps and Large Corporates in Lithuania. Through the additional portfolio created by the guarantee, the operation is expected to also indirectly support local SMEs.
The agreement will make available up to €50 million in new financing for Lithuanian Mid-Caps, of which the EIB will guarantee 50%, supporting them in growing their way out of the economic fallout caused by the COVID-19 pandemic.
Gintarė Skaistė, Minister of Finance of the Republic of Lithuania, said: “Our extensive partnership with the European Investment Bank is particularly significant. The EIB is at the forefront of implementation of the European Union priorities to boost sustainable growth and reinforce economic and social cohesion. Signing this Agreement under the framework of the European Guarantee Fund will further strengthen our fruitful cooperation and benefit the corporates in Lithuania by improving their access to finance.”
Thomas Östros, vice-president of the European Investment Bank Group, said: “The European Guarantee Fund has already made available several hundred million euros in support of Lithuanian businesses. Most of this financing was aimed at supporting SMEs, which were the most affected by the crisis. Now, thanks to our collaboration with VIVA, and the support of the Finance Ministry, I am glad that we can take a further step to also make financing available to larger companies.”
Dainius Vilčinskas, Chief Executive Officer at State Investment Management Agency, VIVA, noted: “This is the first time that the EIB steps forward and agrees an EGF guarantee not only for small, but also for medium and large Lithuanian companies. This agreement will allow VIVA to enable access to finance for Lithuanian companies through debt instruments such as bonds and loans. We are strongly committed to becoming a viable financial partner for Lithuanian business, and I hope this partnership will also serve as a milestone for our future cooperation with the EIB in developing new financing solutions for Lithuanian businesses. The whole spirit of this agreement stands for the bilateral understanding of the importance of responsible and effective business nudges for a better and faster post pandemic recovery, enhanced business investments and a continuous business shift to more sustainable models”.
The Pan-European Guarantee Fund (EGF) was created by the European Investment Bank Group (EIB and EIF) and EU Member States as a community response to the COVID-19 pandemic. It aims to increase access to credit for businesses in the wake of the economic effects of lockdowns and restrictions to contain the COVID-19 outbreak.
In 2021, the EIB Group stepped up its support for Lithuania by signing around €1 billion in financing for Lithuanian projects, with support going mainly to SMEs in the face of the COVID-pandemic, as well as the energy sector in the country.
TheEuropean Guarantee Fund(EGF) was set up by the EIB Group with contributions from Lithuania and other EU Member States to shield companies suffering from 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 to boost those parts of the EU economy that have been hit the worst.
Established at the initiative of the Bank of Lithuania, the State Investment Management Agency (VIVA) is responsible for managing the State Aid Fund for Business (the Fund), evaluating, selecting and supervising investments, managing risk, and ensuring the Fund earns a suitable return. The Lithuanian state, represented by the Ministry of Finance, is the company’s sole shareholder. VIVA’s main objective is to provide financing to large and medium-sized enterprises and to help ensure the sustainable performance of large and medium-sized companies and the vitality of the capital market.
Together with the Lithuanian government, the European Investment Bank (EIB), as the European Regional Development Fund (ERDF) manager, is providing a €90 million loan to the newly established SB Modernisation Fund, a subsidiary of Šiaulių Bankas. The fund will receive a total of €275 million in loans from Lithuanian and foreign financial institutions, such as the Council of Europe Development Bank, INVL Asset Management, Swedbank, Šiaulių Bankas and Nordic Investment Bank.
In the second year of the pandemic, there was a significant economic rebound both in the European Union and in Poland. The frequently changing economic growth forecasts proved how dynamically the conditions in which we operated had changed. The EIB Group adjusted its financing to the growing needs and in 2021 supported private business and the public sector with a record €6.5 billion.