Joint investing is a method of investing by which various investors pool their investments together into a project or company, thus minimising risk and encouraging collaboration through the sharing of ideas and expertise.
On 24 May, the Secretary of State for Business published a resolution, in which the Agreement of the Council of Ministers was published, which regulates the activity and functioning of the State Fund for Joint Investment.
The objective of the Joint Investment Fund, created within the framework of the NextGenerationEU programme, is to make foreign investment more attractive to private companies in Spain in diverse strategic sectors aligned with the objectives set forth in the Recovery, Transformation and Resilience Plan, such as incentivising the modernisation of production, energy and digital transitions, transport and sustainable agriculture, or biotechnology.
The joint investment fund, endowed with 2 billion euros, is managed by COFIDES, a public-private institution (53% State owned, 47% in private hands) dedicated to the management of State funds, which offers financing to private companies in investments related to public policy.
The Fund manager must regularly monitor its operation and must inform the Interministerial Technical Investment Committee (an arm of the Treasury) of aspects such as the evolution of the Fund or its compliance with the technical guidelines imposed on it by the European Commission.
Amongst the principal characteristics of the Joint Investment Fund, it is particularly worth noting the following aspects:
- The investments of the Joint Investment Fund, in line with profitability and market risk criteria, will be made jointly with foreign investors as well as public financial institutions as well as companies and private funds.
- Investors must contribute an amount equal to or greater than the amount contributed by the Joint Investment Fund.
- The shares taken by the Joint Investment Fund shall never exceed 49% of the total capital per operation, the Fund always having minority shares.
- The validity of the Fund will be indefinite; however, investments will be temporary, and a time period for divestment must be established.
The agreement of the Council of Ministers of the 16 April introduces the eligibility and selection conditions for operations, as well as establishing the functioning and management of the Fund.
So that a company can benefit from the investments in the Fund, it must meet requirements such as the investment having been made on Spanish soil, or the sector complying with the objectives of the Fund. Financial companies will not be able to benefit from the investments of the Fund, neither will those companies centred on the production of energy from fossil fuels, or those belonging to high-emission industries, be able to take advantage of this type of financing.
The hope is that this tool might boost foreign investment in Spain as well as modernising the production model in accordance with the plans of the European Union in their Recovery, Transformation and Resilience Plan.
Oscar Vilá
Vilá Abogados
For more information, please contact:
7th June 2024
