State-owned Spanish bank launches €1.2bn FoF(2)

As Spanish SMEs continue to suffer from a funding drought, the Instituto de Crédito Oficial has set up a €1.2bn fund to provide alternative financing via venture capital funds.

Instituto de Crédito Oficial (ICO), a Spanish state-owned bank, has launched a €1.2 billion fund of funds to invest in venture capital, in a bid to provide small and midsize enterprises with an alternative to standard bank financing. 

FOND-ICO Global, which will be Spain’s first public venture capital fund of funds according to ICO, plans to promote the creation of venture capital funds which invest in Spanish companies at all stages of their development. 

The aim of the fund is to improve the financing opportunities for Spanish SMEs, increase their competiveness, diversify their funding sources and promote their internationalisation, according to a statement. 

The fund of funds will be managed by AXIS, a Spanish venture fund which is owned by ICO.  AXIS will be responsible for selecting the most appropriate private funds and fund managers over a four year investment period, with FOND-ICO Global acting as an anchor investor in order to attract national and international private investors. 

ICO estimates the fund will assist 40 new venture funds during this time. It is unclear how much capital the fund will typically commit to each fund. 

ICO and AXIS did not respond to a request for comment before press time.  

Spanish businesses continue to suffer from the country’s sluggish economy and weakened banking system. Bank debt has been extremely difficult to obtain, Mikel Bilbao, a partner at GBS Finanzas, told PEI last year. “In 2012, 92 percent of the syndicated loans in Spain have been refinancing. This shows that for new deals and projects, there’s quite a small amount of debt and shows why the environment has been so tough,” he said.