EU proposes 15 billion euro fund to back strategic firms
Saturday, 05 30 2020, Category: Economy, Country: Europe
The European Commission has proposed setting up a 15-billion-euro fund to invest in strategic companies that have been weakened by the COVID-19 crisis.
The proposal, which needs to be approved by EU governments and lawmakers, comes after firms worldwide became vulnerable to hostile takeovers as share prices fell and there were fewer funding opportunities during the coronavirus crisis.
The new facility could buy stakes in, or offer loans to, strategic companies in sectors such as healthcare, space, defence, digital and green technologies, EU industry commissioner Thierry Breton told a news conference on Friday.
Concerns over the vulnerability of some European companies grew in March after reports that the United States administration was looking into gaining access to Germany-based CureVac, a biotech firm working on a new technology that could slash costs for vaccines. The EU Commission reacted by promising 80 million euros to CureVac.
The EU financial support would go to companies “that need more capital to continue their expansion,” Breton said, adding that it would also allow firms to shun help from unwanted partners.
The new fund is tiny compared to large sovereign wealth funds which have hundreds of billions of dollars to invest in strategic firms. However, its financial firepower is expected to be boosted by attracting private investors with guarantees.