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ot a rescue fund, quite the opposite. It is a new financial instrument aimed at boosting solvent Catalan companies that require a capital injection to undertake ambitious growth projects, such as the acquisition of companies in foreign markets or investments in cutting-edge technology that allow them to enter new markets or expand their product range.
This is according to the director of Economic Promotion, Competition and Regulation of the Generalitat, Lluís Juncà, who is convinced that in Catalonia "there are many stimulating projects" susceptible to receiving funds from a new vehicle that has been initially named the Business Growth and Consolidation Fund.
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According to Juncà, this project, promoted by the Department of the Vice-presidency and of Economy and Finance, was not born out of the pandemic, as it had been on the table since the beginning of the legislature. He admits, however, that the crisis caused by the health emergency has accelerated the process, with the aim that the Administration be part of the solution and play a key role in the economic reactivation process.
Our goal is to invest in growth projects with great potential; we want to boost key sectors of the Catalan economy and favor, for example,"Our goal is to invest in growth projects with great potential; we want to boost key sectors of the Catalan economy and favor, for example, company acquisition processes abroadto create larger groups that can be controlled from Catalonia," he explains.
In an interview with The New Barcelona Post, the general director states that they have identified between five and six "strategic sectors" where to invest this fund, among which are biomedicine and the health economy, industry 4.0 and agri-food companies.
"These types of projects in which we want to invest end up acting as pillars of a sector and around them an ecosystem of other smaller companies is articulated. Without these pillars it is very difficult to have structured sectors and that is why we must promote these operations."
Attraction of foreign investors
The Government's objective is to contribute up to a maximum of 50% of the resources that will be allocated to the Growth and Consolidation Fund. The other half will be sought in the private sector, with the aim of attracting other investment funds, the main financial entities with a presence in Catalonia and also foreign capital. "It is essential to attract international institutions to also invest in the fund," explains Juncà.
The Director of Economic Promotion of the Generalitat is clear that public-private collaboration is essential at this time "due to its multiplier effect" and assures that there have already been preliminary conversations with potential investors where it has been shown that there is strong interest in investing in growing companies. "This public-private collaboration must be valued; serious countries with dynamic and solvent economies carry out this type of initiative and, therefore, in Catalonia it is also convenient for us to do so," he argues.
Serious countries with dynamic and solvent economies carry out this type of initiativeThe new fund could be endowed with 200 million euros, although the figure is only indicative and will not have to be disbursed all at once, but as projects materialize. According to Juncà, this figure of 200 million has been chosen because it would allow the new vehicle to have resources superior to other private initiatives that already exist in the market in Catalonia.
"We do not want to compete with the important investment funds that already exist in Catalonia doing useful work. What we want to do is detect those areas where these funds do not cover the demand to face certain more ambitious projects," he explains.
A fund for established companies, not for 'startups'
The Generalitat, he adds, has long wanted to respond to companies, especially in the industrial sector, that demand more sources of financing to be able to grow. "From some sectors, they complain that in the financing market there is a certain bias towards technology companies and startups with little industrial weight. This is where we have more possibilities of having a greater impact."
He emphasizes, in this regard, that the new fund is not intended for startups or companies starting from scratch, but for companies that already have a certain track record, with the ambition to continue growing and that invoice a minimum of 10 million euros.
The new vehicle, which will have a legal personality yet to be defined, will use different investment alternatives, such as direct entry into the capital and on the board of directors or the granting of credits or participating loans aimed at financing these growth projects.
It will not be a rescue fund, it is the antithesis of a rescue fundJuncà wants to make it very clear that this instrument, which is intended to be launched during 2021, will not be aimed at companies in crisis, but quite the opposite: "at ambitious, solvent companies that are already doing well, so that they do even better and have a more powerful impact and driving role on our economy than they do now." "It will not be a rescue fund, it is the antithesis of a rescue fund," he emphasizes.
The director of Economic Promotion admits that historically the Generalitat, through vehicles such as Avançsa, has tried to help companies with problems, "a task that logically must continue to do" to mitigate the social impact in certain territories, but states that the Government "cannot do only that", but must also help promote large growth projects.
Avançsa is not enough
He points out that although Avançsa in recent years has "timidly" tried to diversify its investments and not focus solely on companies in crisis, it is a "very residual" activity, since the endowment of this vehicle of the Department of Business is very small and is, fundamentally, invested in Comforsa and in Actius de Muntanya (the Boí-Taüll ski resort). The portfolio of companies in which Avançsa participates also includes companies such as Idiada, Gas Gas, Scutum, Tecalex, Cremalleras Rubí, Gomà-Camps, Nylstar, Enertika, Petrocat, Circuit de Catalunya, Lacrem, Dogi and Ulabox, among others.
Participation of the ICF
The Department of the Vice-presidency and Economy has just put out to public tender the design of this new investment instrument for growth and consolidation projects in Catalonia. The consultancy or fund that is awarded this advisory task will have two months to propose the characteristics and type of vehicle that will be constituted.
According to Juncà, it will "make a lot of sense" to involve the Institut Català de Finances (ICF) in the fund's management body to take advantage of all its knowledge and experience in business investments also made through investment and venture capital funds.
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