High-speed has a necessity for any business to be competitive in today’s global economy. This is true even for more rural and less populated areas where access to broadband infrastructure can be limited, if not altogether non-existent.
To combat this the European Commission and European Investment Bank (EIB), alongside the German KfW, the Italian Cassa depositi e prestiti and France’s Caisse des Dépôts, have announced the Connecting Europe Broadband Fund. The goal of this fund, which has already pooled 420 million euro, is to finance the construction of broadband network infrastructure across underserved areas of Europe. According to the OECD’s “Pension Funds Investment in Infrastructure Survey”, between 181 billion to 268 billion euro of investments are needed by 2020 to achieve the broadband targets that have been set by the European Union.
The Connecting Europe Broadband Fund is managed by Luxembourgian firm Cube Infrastructure Managers (Cube IM). Cube IM is a management company that focuses on strategic infrastructure markets offering sustainable growth potential. Cube IM aims to pool a further 500 million euro for guaranteeing broadband investment with the goal of mobilizing at least one billion euro in the fund over the next five years.
The Fund will provide funding to meet the growing demand for financing of smaller-scale broadband networks across rural Europe, where such financing may not attract investors ordinarily. It will complement not only existing EU financial instruments working in this sector but also financing through private channels.
This will be the first investment platform supporting broadband infrastructure under the umbrella of the European Fund for Strategic Investments (EFSI), which functions as the central pillar of the Investment Plan for Europe. Investment in the fund is also open to participation of private investors.
The first 420 million euro of investment in the fund is broken down as follows: 140 million euro from the EIB (with 100 million backed by the EFSI); 100 million euro from the European Commission via the Connecting Europe Facility; 50 million euro each from KfW, Cassa Depositi e Prestiti, and Caisse des Dépôts; at least 5 million euro from Cube IM; and 25 million additional euro from private investors.
Subsequent rounds of investment are scheduled to follow over the next 18 months, with the investment period lasting five years. The fund uses a unique governance structure to reconcile the varying interests of investors to maintain a balance between the public and private sectors.
The Fund is able to provide varying levels of risk to investors, partially because the 100 million euro investment from the European Commission is set up to be the first loss piece. Over the next five years, the Fund is expected to unlock over one billion euro in investments to bring high-speed broadband to the far corners of the European Union and further connect the people living there to the rest of the population.
For further information: European Investment Bank