EU greenlights Denmark's export & investment fund worth €4 bn

Denmark notified the commission its plans to set up an export and investment fund, with initial capital of up to €807 million or DKK 6 billion. The fund will be established as a new, fully state-owned entity gathering three existing state-owned entities—the Danish Growth Fund, the EKF Denmark’s Export Credit Agency, and the Danish Green Investment Fund, the European Commission said in a press release.

The aid will take the form of a €3.3 billion or DKK 24.8 billion contribution in kind of the three existing state-owned entities; a capital injection of up to €807 million or DKK 6 billion; state guarantees valued approximately in €1.3 million or DKK 10 million per year; and an exemption from paying corporate income tax, with an estimated average value of approximately €38.6 million or DKK 287 million per year.

The fund will be entrusted with addressing market failures and supporting economic development and investment opportunities. It will intervene to ensure access to financing in areas where companies cannot receive sufficient support from the market. The fund will operate with a focus on providing funding to small and medium sized companies, in particular in the field of green and sustainable finance, which is already a key concern to all three existing entities.

The commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU, which allows state aid to facilitate the development of certain economic activities or of certain economic areas.

The commission found that the measure facilitates the development of certain economic activities in a variety of sectors that face difficulties in obtaining sufficient finance in the market.

The measure minimises the distortions of competition and trade within the EU. In particular, the measure is necessary and appropriate to improve access to finance for sectors or companies that have difficulties in obtaining sufficient finance from the market. The measure is also proportionate as the activities conducted by the fund will be proportionate and the fund’s estimated balance sheet remains relatively small compared to those of other promotional institutions in the EU, added the release.

The measure has sufficient safeguards to avoid undue negative effects on competition and trade in the EU. In particular, the fund’s financing activities will be subject to measures ensuring that private investors are not crowded out, should they be willing to provide financing to companies. The commission has approved the fund’s activities until April 30, 2030. Any further prolongation would need to be notified to and reviewed by the commission for approval.

On this basis, the commission approved the Danish measure under EU State aid rules.

Fibre2Fashion News Desk (NB)