Perspectives from France’s CAP 3RI investment platform
Member States and regions can make use of financial instruments within 'investment platforms' that combine the European Regional Development Fund (ERDF) alongside the European Fund for Strategic Investments (EFSI) and national, regional and private finance. An example of how such an investment platform can work in practice is explained by the fi-compass 'Third Industrial Revolution' case study from Northern France. This ERDF financial instrument, operating in the Nord-Pas de Calais area of the Hauts-de-France region, has now started supporting investment that contributes to Thematic Objective 4 of the European Structural and Investment Funds (ESIF) and the low carbon economy.
President of the Hauts-de-France Region, Xavier Bertrand, welcomed the investment platform noting that: “Having ambitions is good and having an action plan is good but it also requires financing”. This ERDF/EFSI investment platform was designed as a dedicated funding vehicle to help implement the region’s ambitious Third Industrial Revolution strategy. Philippe Rapeneau, Vice President of the Region in charge of the strategy, explains that their CAP 3RI investment platform can: “provide equity financing of around one or two million euros to companies for a period of four to five years”. Other investment options may also be available from CAP 3RI, which includes a budget from the ERDF for technical support grants.
Virginie Renault, Director of the Region’s Third Industrial Revolution initiative, summarises their key lessons learnt to date from establishing the CAP 3RI investment platform: “Firstly a clear strategy is required, and the ex-ante assessment should provide a good knowledge about both market needs and market failures in order to ensure the financial instrument’s relevance. Then it is also important to identify the best financial interlocutor as well as the focus on governance between the platform manager and the managing authority”. CAP 3RI’s ex-ante assessment findings and governance arrangements are described in the fi-compass case study document.
Nord Capital Partenaires are the investment platform's fund managers. These private sector investment specialists were selected through an open and transparent procedure. Olivier Motte from Nord Capital Partenaires highlights lessons learnt from the introduction of this thematic investment platform. “When the fund began in early 2016 we had to deal with a lot of funding requests because there had been a lot of 'buzz' about the fund's launch. However we found that many of the requests were not eligible and so we had to make sure that the market understands CAP 3RI’s eligibility criteria related to sustainable development, the circular economy, and energy transition. Business groups including the chamber of commerce helped us to increase awareness about what can and cannot be financed by the CAP 3RI investment platform”.
Investment platform pipeline
Efforts to clarify CAP 3RI eligibility have paid off and a pipeline of investment projects has progressed. Mr Motte confirms that the first investment was approved at the end of 2016 for Drekan, a company in the renewable energy sector: “This first investment with Drekan will create 60 jobs in the region and such results demonstrate the strong emphasis in CAP 3RI on encouraging employment”.
Drekan Chief Executive, George Thibaut, appreciates the fact that the CAP 3RI investment platform offers distinctive finance as well as technical support grants: “CAP 3RI was an interesting solution because as well as seeking capital from the fund, we had access to a CAP 3RI grant to help us finalise our business plan for the investment. This type of aid would probably not have been offered by more traditional investment fund sources”.
CAP 3RI’s current pipeline also includes other business projects that will support regional employment and economic growth in the energy sector, as well as in waste management, and the use of wood materials for sustainable construction. These will help the investment platform to meet its absorption targets and in this respect Mr Motte is confident that: “By the end of the first quarter of this year we will already have invested around half of our ten million euros annual target for 2017”. Such strong demand for CAP 3RI finance can allow the fund manager to focus even further on optimising quality results from the ESIF/EFSI investment platform.