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Investment Plan: First EU fund fully dedicated to broadband infrastructure to unlock at least €1 billion over 5 years

02/07/2018
The European Commission and the European Investment Bank (EIB), together with the German KfW, the Italian Cassa depositi e prestiti and France’s Caisse des Dépôts, announced the first pooled €420 million for the Connecting Europe Broadband Fund to finance broadband network infrastructure across underserved areas in Europe

 

The Connecting Europe Broadband Fund, which is managed by Cube Infrastructure Managers, aims to pool around €500 million for guaranteeing broadband investments in order to mobilise at least €1 billion in investment over five years.

The Fund was set up to meet the growing demand for financing of smaller-scale broadband projects across Europe, which currently do not have easy access to funding. This support will complement existing EU financial instruments for broadband development as well as other financing currently available on the market through private investors or private financial institutions. The Connecting Europe Broadband Fund is the first investment platform to support broadband infrastructure under the European Fund for Strategic Investments (EFSI), which is the central pillar of the Investment Plan for Europe. The investment platform is open to the participation of private investors.

The Connecting Europe Broadband Fund has so far raised €420 million at first closing through commitments from:

  • EIB will invest €140 million (out of which €100 million are backed by the EFSI);
  • European Commission, via the Connecting Europe Facility, will invest €100 million;
  • KfW will invest €50 million;
  • Cassa Depositi e Prestiti will invest €50 million;
  • Caisse des Dépôts will invest €50 million;
  • Cube Infrastructure Managers (Cube IM) will invest at least €5 million;
  • and additional €25 million will be contributed by other European private investors.

The Fund provides various levels of risks to investors (with the Commission assuming the first loss piece) and uses a unique governance structure reconciling the interests of different investors by ensuring a balance between public and private investors.

The subsequent closings should follow over the next 18 months. During a five-year investment period, the Fund aims to invest equity and quasi-equity in economically and technically viable broadband projects (with a focus on new infrastructure projects). The investments should be in line with the European connectivity targets to provide by 2025 internet connections with download/upload speeds of 1 Gigabit of data per second to all schools, transport hubs and main providers of public services as well as digitally intensive enterprises. The Fund targets typically rural and sparsely populated regions and areas where private investment needs to be reinforced.

An investment by the Fund will not exceed €30 million for one project. Overall, the Fund is expected to unlock additional investments between €1 billion and €1.7 billion for broadband rollout in areas where very high-capacity networks are not yet deployed.

Background

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. In 2017 alone, the Bank’s investments made high speed digital connections available for 7.4 million European households.

The Connecting Europe Broadband Fund was announced in December 2016 as the first investment platform to support broadband infrastructure under the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe.

The Investment Plan for Europe focuses on strengthening European investments to create jobs and growth. It does so by making smarter use of new and existing financial resources, removing obstacles to investment, providing visibility and technical assistance to investment projects. The EFSI is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. So far, the projects and agreements approved for financing under the EFSI are expected to mobilise around €294 billion in investments and support around 644 000 SMEs across all 28 Member States. Find the latest EFSI figures here.

Cassa depositi e prestiti is the National Promotional Institution that has supported the Italian economy since 1850. It finances public investments, nurtures international cooperation and is the catalyst for the country’s infrastructure growth. It backs Italian enterprises, helping them innovate and grow, while fostering their exports and international expansion. As the primary operator in social and affordable housing, CDP contributes to the growth of the Italian real estate sector and promotes urban transformation. CDP’s important stimulative role in Italy’s economy is evident in its 2016-2020 Business Plan. During this five-year period, CDP will inject €160 billion, plus over €100 billion through public and private funds, into the economy to help drive Italian growth.

KfW is one of the world’s leading promotional banks. With its decades of experience, KfW is committed to improving economic, social and ecological living conditions across the globe on behalf of the Federal Republic of Germany and the federal states. To do this, it provided funds totalling €76.5 billion in 2017 alone; and of this, 43% went into measures for protecting the environment and combating climate change. KfW does not have any branches and does not hold customer deposits. It refinances its promotional business almost entirely through the international capital markets. In 2017 KfW raised €78 billion for this purpose. In Germany, the KfW Group is represented in Frankfurt, Berlin, Bonn and Cologne. Its network includes 80 offices and representations around the world.

Caisse des Dépôts and its subsidiaries form a French public long-term investor group serving the general interest and economic development of local areas.  It combines five areas of expertise: pensions and professional training, asset management, monitoring subsidiaries and strategic shareholdings, business financing (with BPI France) and Banque des Territoires.

Cube IM, a reputable Alternative Investment Fund Manager based in Luxembourg with extensive experience in infrastructure and ICT projects, had been selected as the approved applicant to manage the Connecting Europe Broadband Fund through a public procurement process carried out by the EIB over the summer of 2016. Cube IM will identify broadband projects and make investments according to the investment guidelines of the Fund in the European Union, Norway and Iceland.