Minister Adriaansens of the Ministry of Economic Affairs and Climate and the Board of Invest-NL have signed an agreement enabling Invest-NL to establish blended finance structures. This agreement provides Invest-NL with a framework for creating financing structures where subsidies can be used as potentially revolving financing and combined with private capital. This creates new financing opportunities for projects and enterprises that are crucial for significant societal transitions towards a sustainable and innovative Netherlands.
What is blended finance?
Blended finance involves the use of public funds to attract private capital for companies and projects with social value. This approach facilitates high-risk and innovative projects that would otherwise not have access to sufficient funding. The goal is to achieve important societal objectives such as sustainability and innovation by removing financial barriers.
In the whitepaper “Vision on Blended Finance,” Invest-NL explains the possibilities of blended finance. Senior Business Development Manager Dolores de Rooij stated:
With this agreement, Invest-NL can offer a broader range of financing options for innovative and sustainable companies and projects that are not sufficiently served by existing public and private resources. This helps in finalizing the business cases for projects and companies that can make a significant contribution to the transition objectives facing the Netherlands.
How does blended finance work?
In blended finance, subsidies can be utilized in various revolving forms, such as subordinated loans, quasi-equity, or other financing instruments with a repayment obligation. This helps to mitigate risks for private investors, making them more willing to invest in critical and high-risk projects essential for the transition. It also ensures that funds flow back to the state.
Why is this Important?
The agreement between Invest-NL and the Ministry of Economic Affairs and Climate includes overarching arrangements on mutual cooperation in advising and implementing blended finance. With this agreement, Invest-NL can offer a broader range of financing options to companies working on sustainable and innovative projects. This is crucial for achieving the Netherlands' transition objectives, such as the move to a sustainable economy. By smartly combining public and private funds, projects that would otherwise not receive financing can still be realized.
