Generalitat Valenciana to launch €200m coronavirus fund

Alessia Argentieri
24 March 2020

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Valencia's local government, Generalitat Valenciana, via its Institut Valencià de Finançes (IVF), will launch a €200m private equity fund to support local companies hit by the coronavirus crisis.

A private equity firm will be selected in the coming months to manage the new vehicle.

IVF will commit €50m to the fund, while the remainder will be raised from Spanish family offices and institutional investors.

The financing provided by the fund will be directed towards small and medium-sized companies across the region to help them continue to operate in the face of the economic and social emergency brought on by the contagion, and support their recovery in the aftermath of the crisis.

The fund will invest in profitable companies with high-growth potential, generating EBITDA of at least €3m from revenues in excess of €50m. It will deploy equity tickets in the €10-15m range and target primarily the manufacturing sector.

In addition, the local government intends to improve companies' access to credit by launching a €40m participative loans scheme.

Furthermore, a €100m infrastructure fund backed by Generalitat Valenciana alongside the European Investment Bank (EIB) and other institutional and corporate investors, will be launched in the coming months.

With more than 33,000 infections and 2,000 deaths, Spain is the most affected country in Europe after Italy. To fight the contagion, the government declared a nationwide lockdown, forcing people to stay indoors, with exemptions only for exceptional circumstances. Emergency hospitals have been set up across the country, while the government announced a boost in the production of masks, ventilators and fast tests to detect the virus.

As in other European countries, the consequences of the contagion are likely to be dramatic, with prolonged damage to businesses and staff, and a strong financial intervention from the state is considered essential in order to avoid the collapse of the local economy.

"At this point we consider a recession inevitable and forecast a 10% reduction of the GDP in 2020," IVF CEO Manuel Illueca told Unquote. "Supply chains and demand are paralysed across the country, and we expect crucial sectors of the Spanish economy, such as tourism, transportation and manufacturing, to be hit hard by the crisis. However, with the support of the instruments that we are putting put in place we can forecast a double digit recovery in 2021."