New development bank in town: Invest-NL
Invest-NL will finally become a reality. On the 6th of June, the European Commission approved – under EU State aid rules – the longstanding Dutch plans to set up a new development bank Invest-NL with initial capital injection of up to €2.5 billion. At the helm is CEO Wouter Bos, former chairman of the board of VUmc and former minister of Finance. The development bank aims to offer entrepreneurs a one-stop shop for venture capital, guarantees and other financial tools.
In addition to the initial capital, the Dutch authorities will provide Invest-NL with yearly subsidies of €10 million to provide advisory services on the development or improvement of certain financing schemes. Overall, the Dutch State will hold 100% of the shares in Invest-NL and provide equity to the value of € 1.7 billion across various sectors.
- Facilitate access to financiaing of activities in social transition sectors i.e. energy transition and sustaibility, mobility, food(tech) and the digitalisation of the industry (IoT). R&I and R&D for healthcare, safety and education also fall within the scope of Invest-NL.
- Leverage funding (venture capital) to support the successfull growth of start-ups and scale-ups grow into larger companies.
- Support Dutch companies operating internationally expand their access to foreign markets. Invest-NL will assist them with market access tools for their new products – especially those compabies offering integrated solutions for key global issues. Specific attention is given to companies and innovations in the field of renewable energy, climate change, water management and food supply.
In short, the bank will support Dutch small and medium-sized enterprises (SMEs) and small-midcaps focusing on today’s key social impact questions. Innovation and development in this area and in particular by this sector – generally perceived as high risk – suffers due to market failures in lending and capital markets. Invest-NL will also facilitate access to EU funding such as InvestEU and the European Fund for Strategic Investments (The Juncker Plan). Invest-NL will ensure sufficient safeguards are put in place to not deter private investors.
Discussions on the realisation of the bank have been ongoing since 2017. This very welcome final decision by the Commission follows a lot of effort by multiple public and private (pressure) groups. However, now the real work starts. Depending on the details of the Commission decision (to be published in the coming weeks), Invest-NL will need to clearly define their mandate and set-up strict investment criteria to substantiate their lending position. Especially vis-a-vis the already existing European development banks such as the French Caisse des Dépôts et Consignations and the German Kreditanstalt für Wiederaufbau (KfW) and the Spanish Instituto de Crédito Oficial (ICO).
We will be following the developments closely and reporting on the outcomes.Contact Hager Bassyouni directly for more information