- LFF 2 succeeds LFF 1 with additional firepower of up to € 200 million
- LFF 2 will support investments to stimulate further the diversification & sustainable development of the Luxembourgish economy
- It will have a broader scope including hybrid debt equity investments in addition to venture capital
On Friday, 17 March 2023, the Ministry of Finance, Ministry of the Economy, Société nationale de crédit et d'investissement (SNCI) and the European Investment Fund (EIF) officially launched the Luxembourg Future Fund 2 (LFF 2).
LFF 2 is the successor initiative to the existing Luxembourg Future Fund (LFF 1), which reached the end of its active investment period.
The launch of LFF 2 highlights the successful cooperation between SNCI and EIF aiming to stimulate the diversification and sustainable development of the Luxembourgish economy via funding activities. With € 200 million in total financing commitments between SNCI (up to € 160 million) and EIF (up to € 40 million), LFF 2 provides additional firepower in support of innovative projects in Luxembourg.
During the press conference, Minister of Finance, Yuriko Backes, highlighted: "With the launch of the LFF 2, we will pursue a unique partnership that is built on the EIF's deep expertise of managing public policy focused investment initiatives and the SNCI's as well as the knowledge of the Luxembourg economy of both the Ministry of Finance and the Ministry of the Economy. This complementarity helps focus investments in innovative technologies that will generate a sustainable and positive impact in key sectors like finance and climate technologies, thus contributing to the further diversification of our economy."
Like LFF 1, LFF 2 will target a risk-adjusted financial returns whilst simultaneously stimulating the diversification and sustainable development of the Luxembourgish economy with investments across a range of sectors including climate technologies, Fintech, cybersecurity, energy resilience, life science and medical technologies, as well as new space technologies.
Minister of the Economy, Franz Fayot, said: "From a public policy perspective, LFF 2 will provide an important tool in driving forward the diversification of the Luxembourg economy and the development of its strategic sectors by cooperating with the private sector in pursuit of sustainable innovation here in Luxembourg."
In line with the existing LFF 1 initiative, investments under LFF 2 will continue to take place in the form of fund commitments and/or co-investments. However, compared to LFF 1 the investment scope has been broadened and will now:
- Include investment funds and businesses already established in Luxembourg, thereby allowing these entities to expand local operations further.
- Target more mature innovative businesses by providing hybrid debt-equity investments. These less dilutive investment instruments may appeal to companies unwilling to give up further equity stakes. Thus, the addition of hybrid debt-equity investments will allow LFF 2 to invest into companies at different stages of development.
- As such, investments will also be considered for more mature companies, facing a complex and uncertain market environments, including businesses currently exposed to changes in digitalisation, supply chain disruptions or companies transitioning to a low-carbon business model.
SNCI President, Vincent Thurmes, stated: "By further valorising the 'ecosystem dynamics' initiated by LFF 1, LFF 2 will continue to develop together with all the stakeholders Luxembourg's sustainable and resilient economy of tomorrow."
"We're pleased to partner again with the SNCI and leverage on the EIF's experience for the second generation of the LFF initiative," said EIF Chief Executive, Marjut Falkstedt, "Broadening the scope to include hybrid debt equity investments in addition to venture capital will help address the financing needs of innovative companies that can bring value to Luxembourg and strategic sectors of the European economy."
The Société nationale de crédit et d'investissement (SNCI) is a public-law banking institution specialized in medium and long term financing of Luxembourg based companies. SNCI's financing instruments cover investments in fixed assets, innovations and exports. SNCI also grants start-up/transmission loans to newly incorporated or inherited SMEs. It may also finance investments of Luxembourg companies abroad. SNCI may take equity positions, either directly or through affiliated financing companies. For more information, please visit www.snci.lu.
About the EIF:
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments, which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. For more information, please visit www.eif.org.
Press release by the Ministry of Finance, the Ministry of the Economy, the Société nationale de crédit et d'investissement (SNCI) and the European Investment Fund (EIF)