News and Analysis
The Fund of Funds Awards BGN 353.3 Million for Urban Development to Financial Intermediaries
On 20 September 2018, the Fund of Funds signed operational agreements with the two financial intermediaries selected for the Urban Development Fund (UDF), as follows:
- For the regions of Southern Bulgaria and the City of Sofia, the Fund for Sustainable Cities (FSC) Consortium, which includes the UBB, the FLAG Fund, the Sustainable Urban Development Fund and the Bulgarian Consultancy Organization;
- For the region of Northern Bulgaria, the Regional Urban Development Fund (RUDF), which is a company owned by Société Générale ExpressBank (majority stockholder), Elana Investment, Elana Holding and Balkan Advisors.
The financial intermediaries will manage financial resources of a total of BGN 353.3 million. They undertake to secure additional private resources; thus the amount to be made available to the final recipients for the UDF is expected to reach almost BGN 600 million.
The Urban Development Fund (UDF) is an instrument funded through Operational Programme Regions in Growth 2014 – 2020 and is a follow-up to the JESSICA initiative from the previous programming period.
UDF financing will be offered as loans with embedded guarantees targeted at a wide range of potential final recipients, municipalities and municipal enterprises, private companies, public/private partnerships, individuals and others. The financial resources awarded will provide support for projects that improve the urban environment, promote economic growth in the regions and contribute to increasing energy efficiency.
What is new in the current programming period is that financing will now be available to 39 municipalities, versus 7 in the previous one, and the amount of funds available is 5 times higher, i.e. BGN 353.3 million. Also, a part of the investments is earmarked for supporting cultural heritage and tourism across the country.
At the ceremony, Mrs. Svetoslava Georgieva, Executive Director of the Fund of Funds, presented the highlights of the financial instrument which is targeted at sustainable urban development and preserving and development of Bulgaria’s cultural heritage and went on to say, ‘We are bringing to a successful close a very important procedure with a large scope and very high public significance, thus launching the financial instrument with the most resources in our portfolio which will support the economic development and improve urban environment in Bulgaria.’ Mrs. Georgieva thanked her colleagues who worked on the project and said, ‘After just 3 years of hard work, we have managed to build a team of professionals, set up a successful organisation with high expertise in the field of financial instruments that is unparalleled in Europe’.
In their speeches that followed the signing of the operational agreements, the financial intermediaries FSC and RUDF presented their future plans in the context of their mandate as fund managers of the Urban Development Fund.
‘The extended territorial scope and the five-fold increase in the amount of the funds from co-financing are a sure sign of the direction in which Europe would like to develop its economy: toward sustainability and improvement of urban environment. The co-financing that we, as a financial intermediary, will provide, at a rate of over 40 %, demonstrates also our willingness to support projects of public significance that will improve the standard of living in Bulgaria. We expect this new type of financial instrument to be implemented increasing in the EU cohesion policy post-2020’, said Mr. Petar Andronov, representative of the FSC and Chief Executive Director of the UBB.
- The Regional Urban Development Fund is a Bulgarian public/private partnership. We continue to work as successfully as we have since 2012. We are aware of our key role as a contractor, prudentially managing the financial resources entrusted to it and protecting, above all, the community interest, rather than any corporate, government or private interest. We are happy to be working in north Bulgaria, where will add another 14 towns to the three cities with which we have already worked as partners, as well as hundreds of cultural heritage sites that expect their development’.
Updates on the launch of financing for final recipients will be published regularly on the website of the Fund of Funds at http://www.fmfib.bg, as well as on the websites of the financial intermediaries.