One-stop shop for development assistance

(James Butler, CC BY-NC-ND)

Polish Development Fund is a state-owned financial group which offers instruments supporting the development of companies, local governments and individuals, and invests in sustainable social development and national economic growth.

Thus far, six development institutions, supervised by five ministries, have operated 120 internet websites and offered 112 products and services. From now on, the Polish Development Fund Group offers 67 products grouped in 12 packages.

The 12 packages include: Startup Finance (e.g. venture capital), Finance for Growth (e.g. de minimis guarantees), Development of Innovations (e.g. acceleration programs), Foreign Expansion (e.g. consulting for exporters), Development of Human Capital (e.g. Academy of Innovation), Financial Liquidity (e.g. insurance and guarantees in domestic trade), Financing of Business Restructuring, Large Investments (e.g. debt/equity financing of large investments with a long-term return horizon), Financing of Infrastructure (e.g. equity financing and PPP), Financing of Housing (e.g. a fund operating within the “Housing+” program), Equal Opportunities (e.g. student loan fund) and Investor Support.

The first step, however, is to determine who is interested in receiving the support – a new innovative company, a small or medium enterprise, a large enterprise, local government and the public sector bodies, a foreign company or an individual client.

These fields of activity result from the integration within the Polish Development Fund Group of a number of previously independent development institutions: Bank Gospodarstwa Krajowego (Bank of National Economy, BGK), Export Credit Insurance Corporation (KUKE), Industry Development Agency (ARP), Polish Agency for Enterprise Development (PARP) and others.

According to the president of the Polish Development Fund, Paweł Borys, the whole group will allocate a total of up to EUR14bn for exports; EUR1.4bn for housing investments (mainly Housing+ program); EUR1.2bn for infrastructure investments; and EUR650.4m for innovations (and this is the budget of Start In Poland).

The amount of EUR14bn earmarked for exports will mainly go to financing such instruments as guarantees, insurance and export credits, and to the investments of Foreign Expansion Fund. 

Tomasz Pisula, the president of the Polish Trade and Investment Agency, spoke about reforming  the trade office in Shanghai, opening new offices in Singapore, Saigon, Nairobi and San Francisco, and soon also in Tehran. The number of offices is supposed to increase by 15-20 per year, until it reaches 60. Apparently 190 foreign investments worth EUR4.2bn euros are in the pipeline.

Mirosław Barszcz, the president of BGK – Properties SA, has presented two figures. Fifty-six municipalities with the potential for 15,000 apartments have declared their accession to the Housing+ program.

“The largest Polish housing developer builds about 5,000 apartments per year. Hence, in less than four months, we have achieved a pipeline of investment projects which is three times larger, and this is just the beginning,” declared Mirosław Barszcz.

Marcin Piasecki, the president of the Polish Development Fund – Investments, spoke about infrastructure investments. He emphasized that an amount of EUR1.05bn can be allocated to infrastructure projects ranging from EUR11.2m to EUR209m.

The first project is the construction of locomotives in cooperation with the Pesa company (the manufacturer of railway vehicles). The Polish Development Fund will spend EUR11.2m and Pesa will invest the same amount. Thanks to the debt financing the budget of the project amounts to EUR46.5m. Also the financing of the construction of Kraków Ring Road, known as Łagiewnicka Route, has been finished. The budget of this project is EUR186m, out of which EUR46.5m will be provided by the Polish Development Fund, the Bank of National Economy will cover another EUR46.5m, and EUR93m will come from the so-called Juncker Plan. In a press release the Polish Development Fund also mentions its participation in the development of the infrastructure of the Northern Port in Gdańsk and the revitalization of a historic district in Radom.

The smallest amounts are associated with the “Start In Poland” program. This is over EUR650.4m allocated to 1,500 projects. The shortlist for the first competition, Scale UP, as part of which young companies will receive up to EUR58,073 of financial assistance, has already been completed.

“The Polish Development Fund is in the center of this year’s largest venture capital fund in Europe. The fund amounts to almost EUR697m, now we wonder how to acquire a sufficient number of projects. This is a rare problem in Poland: usually there is a shortage of money, whereas we need projects to use the money that is already available,” said the Deputy Prime Minister Mateusz Morawiecki about the “Start In Poland” program.

However, the lack of projects should not affect the Polish Development Fund Group as a whole. The acquisition of shares in Bank Pekao (from Unicredit), carried out together with PZU (the largest Polish insurer), is the best example. The plans of this transaction were not discussed at the time of the establishment of the Polish Development Fund.

„Despite the short, seven-month period of activities of the Polish Development Fund in its present form, we have managed to successfully execute several large transactions and significant investment projects. The Bank Pekao transaction indicates Fund’s support for the creation of a strong financial group controlled by Polish capital,” informs the press release of the Polish Development Fund.

(James Butler, CC BY-NC-ND)

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