EIB Boosts Bulgarian Economy with €291 Million Financing and Advisory Support

EIB Boosts Bulgarian Economy with €291 Million Financing and Advisory Support

(IN BRIEF) The European Investment Bank (EIB) and European Investment Fund (EIF) have forged agreements with Bulgarian partners, including Allianz Bank Bulgaria (ABB) and United Bulgarian Bank (UBB), to enhance the country’s economy and advance its transition to carbon neutrality. Through a synthetic securitisation transaction with ABB and a guarantee agreement with UBB, the EIB Group aims to increase financing for Bulgarian small and medium-sized enterprises (SMEs) and mid-cap companies. Additionally, advisory agreements with Bulgarian ministries and a pilot programme to support startups underscore the comprehensive approach to fostering sustainable development and economic growth in Bulgaria.

(PRESS RELEASE) LUXEMBOURG, 29-Feb-2024 — /EuropaWire/ — The European Investment Bank (EIB) and European Investment Fund (EIF), which make up the EIB Group, announced agreements with Bulgarian partners in Sofia to bolster the domestic economy and the country’s carbon neutrality goal.

The EIB Group strengthened cooperation with Allianz Bank Bulgaria (ABB) through a synthetic securitisation transaction that will increase financing for Bulgarian small and medium-sized enterprises (SMEs) and mid-cap companies. It is the first such deal between the two parties.

Separately, the EIB announced an agreement with United Bulgarian Bank (UBB) — part of Belgium-based KBC Group — to unlock fresh financing for mid-sized companies so they can expand their operations and implement new projects.

Advisory agreements are also part of the overall support package. Together with the Ministry of Environment and Water, the EIB will offer input on water, solid waste and biodiversity projects. In parallel, EIB Advisory teams will help the Ministry of Energy bring together initiatives to upgrade and repurpose facilities belonging to the Maritsa East coal complex. Finally, EIB experts and the Ministry of Innovation and Growth will start a pilot programme to ease the access to early-stage financing for Bulgarian startups.

“In times of economic uncertainty and rising interest rates, we have joined forces with ABB and UBB to improve access to affordable loans for Bulgarian businesses so they can expand their operations and invest in green and digital solutions,” said EIB Vice-President Kyriacos Kakouris. “We will also provide top advisory services and are building upon our excellent cooperation with the Bulgarian authorities to offer expertise to sectors that will underpin Bulgaria’s sustainable development in the years to come.”

EIB Group and ABB deal

The agreement provides capital relief for ABB, freeing up lending capacity that will be used to support Bulgarian companies while contributing to the country’s transition to climate neutrality.

The EIF is providing protection on a mezzanine tranche worth €29 million, which in turn is counter-guaranteed by the EIB, and protection on a senior tranche worth more than €175 million, which is guaranteed solely by the EIF. The portfolio includes consumer loans, SME loans and leases with a total outstanding balance of about €207 million.

Under the arrangement, ABB has pledged to supply fresh lending of €291 million to small businesses and mid-caps over three years. The EIB support is expected to create more favourable conditions for SMEs. Some €64 million of this financing will go to climate action and environmental sustainability projects, highlighting how ABB and the EIB Group are supporting the transition to a low-carbon economy.

“This agreement is a further milestone in our cooperation with the EIB,” said ABB Chief Executive Officer Georgi Zamanov. “It will strengthen financing for small and medium companies in Bulgaria by boosting their sustainable development. This is an important step not only for our customers but also for the country’s overall economic development, including the creation of new jobs.”

EIB and UBB deal

The guarantee agreement aims to unlock fresh financing of about €150 million for mid-caps, helping them to access loans for working capital, new investments and expansion.

Under a €75 million risk-sharing agreement, the EIB will guarantee 50% of new investment and working capital loans to be made by UBB over the next two years to Bulgarian companies with as many as 3 000 employees. The EIB guarantee is expected to result in more preferential and flexible terms for the beneficiaries.

The deal underpins sustainable investments by Bulgarian businesses and creates opportunities for mid-sized companies to expand their operations and implement new projects that will strengthen the economy and increase employment.

“The new EIB instrument for companies with up to 3 000 employees will certainly be a success,” said Dobromir Dobrev, UBB’s executive director for corporate banking and markets. “The financial needs of these companies aren’t sufficiently addressed by other guarantee instruments on the market. We are ready to support their efforts to increase efficiency and competitiveness and transition to a more sustainable development model.”

EIB and Ministry of Environment and Water advisory agreement

A new project advisory support service agreement will cover regional water infrastructure projects and other priority environmental investments in Bulgaria. The deal will facilitate the absorption of European Union grants while advancing climate and environmental sustainability efforts in the country.

EIB Advisory will offer input on 11 water infrastructure projects, on projects for separate waste collection, and on biodiversity on-site verification inspections. The projects are part of the priority investments in Bulgaria’s environmental programme for 2021-2027.

“We have a good history of working together with the EIB in the previous programming period. The EIB’s consulting support for the Programme Environment 2021-2027 will contribute to the effective implementation of priority investments in water infrastructure, separate waste collection and biodiversity on-site verification inspections,” said Julian Popov, Bulgarian Minister of Environment and Water.

Maritsa East complex

The Ministry of Energy plans to repurpose the Maritsa East complex — one of the largest lignite open-pit mining sites in Europe with several coal-fired power plants — so as to retain jobs there and attract investors. EIB Advisory and the ministry will assess the state of the site including its strengths like existing infrastructure and a skilled workforce. The assessment will pave the way for an investors’ roadmap for the transition to cleaner energy. The advisory support will help the ministry ensure the site’s transition takes place in line with economic and social needs and EU rules.

“We highly value the opportunity to draw on the EIB’s expertise for the development of a master plan for the Maritsa East complex,” said Bulgarian Minister of Energy Rumen Radev. “The complex has key strengths such as qualified industrial personnel, consolidated industrial areas and infrastructure security. We will make full use of these advantages in our plans to develop the exceptional potential of the complex.”

Startup support

The pilot advisory programme will facilitate access to growth equity funding for innovative Bulgarian startups and small companies. While the programme will initially focus on companies planning to apply for the European Innovation Council Accelerator programme, it will also help develop a fertile environment for innovative startup businesses as a whole to grow and thrive.

The European Innovation Council supports the commercial deployment of breakthrough technologies by companies in the European Union. But countries with relatively developed innovation and venture capital ecosystems have historically attracted the bulk of funding. The pilot programme aims to level the playing field and amplify the impact of startups, investors and support structures through best practice knowledge and enhanced coordination.

“The launch of this pilot programme in Bulgaria, developed in partnership with the EIB, is an important step in providing equal opportunities for Bulgarian startups and small businesses,” said Bulgarian Minister of Innovation and Growth Milena Stoycheva. “By developing this supportive environment, we aim to ensure that Bulgarian innovators are not only prepared to meet the key criteria of the European Innovation Council, but also to excel in the competitive European and global environment.”

Background information

EIB

The European Investment Bank (ElB) finances sound investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.

The EIB Group, which also includes the European Investment Fund (EIF), signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs.

All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support  €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

Approximately half of the EIB’s financing within the European Union is directed towards cohesion regions, where per capita income is lower. This underscores the Bank’s commitment to fostering inclusive growth and the convergence of living standards.

Media Contact:

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SOURCE: European Investment Bank