• Romania‘s PNRR (Recovery and Resilience Plan) allocates €80M to four local investment funds via the Recovery Equity Fund (REF), managed by the EIF. These funds aare Innova/7, Booster Capital, GapMinder II, and Morphosis Capital II.
• Investors will direct the new funds towards at least 30 startups and companies in areas such as technology, manufacturing, FMCG, services, and health.
• The call for expression of interest is open until the end of 2025, subject to funding availability.
In December 2021, the Government of Romania and the European Investment Fund signed a contract for the establishment of an equity fund of funds financed by a contribution of 400 million euros from Component 9 of the PNRR, namely “Support for the private sector, research, development, and innovation”.
The fund aims to help develop the market and increase investments in Romania.
“The Recovery Equity Fund (REF) will act as a catalyst for the Romanian PE/VC market, with a significant capital injection over the next few years, and an even bigger impact through the participation of the other investors into the funds, which is expected to multiply investments into the country,” Camelia Dragoi, mandate manager at the EIF, shares with The Recursive.
To that end, the PNRR venture capital instrument aims to finance investments in small and medium-sized enterprises, mid-cap enterprises, and infrastructure projects.
Along with the funds obtained from PNRR, the four institutions will add their own financing from fund managers and other private or institutional investors.
“In the medium term, any revenues (reflows) from the funds will return to the REF and be utilized for new financing instruments dedicated to the Romanian market,” says Camelia Dragoi.
The approval process
The recently approved proposals were selected through the open call for expression of interest published in August 2022 and open until the end 2025 subject to resource availability.
“The selection of investment proposals from the many applications received is made by the EIF Equity Investments team based on the internal procedures, according to the assessment criteria described in the call, which include: proposed impact in Romania, management team track record, dealflow origination capability, fundraising capacity, sustainability of investment strategy and its fit with the programme criteria, financial terms,” Camelia Dragoi explains.
Regarding the four approvals announced, the allocation per fund will be announced upon each individual signature of the contribution agreement. However, the recent approvals confirm the initial assumptions described in the REF investment strategy, namely an estimated average allocation of €20M per fund.