Commission Delegated Regulation (EU) 2021/1078 of 14 April 2021 supplementing Regulation (EU) 2021/523 of the European Parliament and of the Council by setting out the investment guidelines for the InvestEU Fund

Financial products will be complementary to the Member States’ use of financial instruments for SMEs at national and regional level in line with the additionality requirements in accordance with Annex V to the InvestEU Regulation.

(a) for debt financing provided by the implementing partner

The EU guarantee may be provided for financing and investment operations taking the form of:

• (a) direct loans by the implementing partner;

• (b) counter-guarantees, on-lending guarantees and other risk sharing arrangements for guarantee schemes implemented by financial intermediaries or implementing partner;

• (c) direct guarantees and other risk sharing arrangements for financial intermediaries or implementing partners;

• (d) direct investment in or alongside a financial intermediary, being an investment fund, a (co-)investment scheme or a special purpose vehicle which invests directly or indirectly in senior or subordinated debt.

Through such arrangements, the EU guarantee shall aim to reduce the particular difficulties that viable enterprises face in accessing finance because of their perceived higher risk or lack of (sufficient) collateral. This can be achieved through supporting, amongst others, the following transactions:

• (a) start-up financing;

• (b) financing transactions with significantly reduced (or no) collateral requirements (unsecured lending);

• (c) subordinated financing;

• (d) financing transactions with repayment conditions or tenures that are not typically provided by financial intermediaries.

The eligibility of a financial intermediary’s proposal for building a portfolio of financing transactions will be determined for each intermediary and, in case of direct financing, for each implementing partner, in relation to its existing business activities. In principle, the EU guarantee is meant to lead to the financial intermediary or the implementing partner broadening its business activity by financing transactions that it would not have financed in the absence of the EU guarantee due to the higher risk profile of such a portfolio. Where a financial intermediary already has a dedicated higher-risk SME financing product in place but its ability to serve market demand is restricted, the EU guarantee may be used to support a significant increase in the volumes of such higher risk SME financing product.

Financing transactions, that can be included in the portfolios will include, among others, investment loans, working capital facilities (including revolving ones), trade finance facilities, loans (including those embedded in or linked to a current account), bank guarantees, leasing transactions, sub-ordinated loans, and senior and subordinated debt issuance loans.

(b) for equity financing provided by the implementing partner

The EU guarantee will be used to guarantee investments into intermediary risk capital funds, including fund of funds and co-investment vehicles that provide equity-and quasi-equity to SMEs and small midcaps at any stage of their development and funds providing debt financing to SMEs and small midcaps.

Possible additional product developments:

The SME window will also be available for the creation of pilot financial products to address market failures and suboptimal investment situations or to crowd-in more private investment (e.g. through providing guarantees for investors). Such pilot schemes, if successful, may subsequently be rolled-out on a fully-fledged basis. In duly justified cases, based on market assessments, these pilot projects may deviate from the conditions set out in Sections 4 and 5 of these investment guidelines.

6.4.   Social Investment and Skills window

6.4.1.   Policy areas of intervention

Support under the Social Investment and Skills window must facilitate the deployment of projects strengthening the social dimension of the Union as underscored in the European Pillar of Social Rights. The emphasis under the Social Investment and Skills window is to generate a positive social impact. In particular, actions under that window aim at upwards convergence, reducing inequalities, increasing resilience and inclusiveness through promoting employment and skills development including entrepreneurship and self-employment, social enterprises, social economy and social inclusion, improving citizens’ health, well-being and overall quality of life; boosting education outcomes and skill provisions and supporting a just transition to a low carbon economy. Actions also aim to increase access to and availability of microfinance and of finance to social enterprises, support financing and investment operations related to social investment, competences and skills and develop and consolidate social investment markets, in the areas referred to in Article 8(1)(d) and in accordance with Article 3(2)(d) of the InvestEU Regulation. The Social Investment and Skills window will facilitate development of skills and key competences, matching, deployment and higher skills utilisation through education, training, including on-the-job training and related activities with a view to achieve the policy objectives set out in the ‘European skills agenda’ (¹⁰¹), the ‘Council Recommendation on Vocational Education and Training’ (¹⁰²), the ‘European education area’ (¹⁰³) and the ‘digital education action plan 2021-2027’ (¹⁰⁴).

The eligible areas for financing and investment operations under the Social Investment and Skills window, are listed in Annex II to the InvestEU Regulation, in particular point 12. The eligible areas may be prioritised in line with Section 2.3.2.1 of these investment guidelines.

The Social Investment and Skills window will support microfinance and social enterprises. In the case of microfinance, a microloan (or microcredit) means a loan of up to EUR 50 000 . The provision of investment amounts of up to EUR 500 000 for social enterprises will in particular be encouraged, while larger amounts of up to EUR 2 000 000 will also be targeted to foster their expansion and scaling up.

Support will also include measures to promote gender equality and equality on other grounds, social inclusion, the supply of and demand for skills, education, training and related services including for the development of sustainable social infrastructure in urban and rural areas. The window will also support social infrastructure (including health and educational infrastructure as well as social and student housing), projects involving social innovation, health services, ageing and long-term care, access to prevention, innovative treatments and e-health options, inclusion and accessibility, and cultural and creative activities with a social goal.

The Social Investment and Skills window will also focus on the provision of sustainable and ethical finance for final recipients facing restrictions or barriers affecting their human rights and fundamental freedoms. It will, in particular, target projects that involve a reasonable degree of (prospective) financial viability, but are not delivered (or not to a sufficient extent) by the market due to higher risks, lack of collateral, not achieving optimal scale without public-sector support or other market barriers. The supported projects must contribute to crowd-in private investment to satisfy unmet needs.

Financing and investment operations will aim at the provision of social infrastructure and connected services that may pertain to:

• (a) inclusive education and training, including early childhood education and care, and related educational infrastructure and services, alternative and inclusive childcare, student housing and digital equipment, that are accessible for all, promotion of digital proficiency from early education years, universal deployment of and access to ICTs in all education and training institutions and remote access and distance learning tools and platforms;

• (b) affordable social housing;

• (c) health and long-term care, including clinics, hospitals, primary care, home services and community-based care;

• (d) health infrastructure projects that contribute to the development of a strategic and geographically balanced network of modernised, digitalised and resilient prevention and healthcare infrastructure, capable of ensuring universal access to critical healthcare infrastructure and services across the EU. Supported projects may also address specific urgent healthcare and emergency response (¹⁰⁵) needs through the development of mobile and field medical stations or medical transport;

• (e) enabling social services delivered at community level and, where feasible, in an integrated way.

Social infrastructure, typically financed by public-sector entities or dependent entities, faces sizeable financing gaps. The fallout of the Covid-19 pandemic aggravated further those needs.

Investments in social infrastructure, in the meaning of point 12(d) of Annex II to the InvestEU Regulation, aimed at addressing market failures or suboptimal investment situations may include operations with public sector entities. In such a situation, a financial product dedicated to social infrastructure investment promoted by public sector entities under the Social Investment and Skills Window may be agreed in a guarantee agreement to address market failures referred to in point 2(f) of Section A of Annex V to the InvestEU Regulation. Financing and investment operations under such financial product satisfy the additionality requirements set out in point (b) of Article 209(2) of the Financial Regulation and in Annex V to the InvestEU Regulation.

Compliance with the relevant Union, national, or regional social legislation, as applicable, is a requisite for operations’ support under the InvestEU Fund. Interventions should fully respect the principle of subsidiarity, by complementing, where they exist, national and regional support schemes. Where applicable the services provided from the supported projects must be delivered at the community-based local level. Regarding infrastructure in the health area, the focus must be on developing models moving from institutional care to prevention, primary care and community-based care and services supporting integrated person-centred care and independent living, in line with the UN Convention on the Rights of Persons with Disabilities.

As regards investments in the affordable social housing, particular focus will be on delivering housing solutions that pursue the objective of lifting people from social exclusion in complementarity, where they exist, with national or regional support schemes. For the purpose of investments supported by the InvestEU Fund, affordable social housing (¹⁰⁶) should be understood as aimed at disadvantaged persons or socially less advantaged groups (¹⁰⁷) who, due to income or social constraints live in severe housing deprivation or are unable to obtain housing at market conditions. When targeting people falling under the ETHOS definition of homelessness and housing exclusion, social housing provision should, as much as possible, follow a housing-led approach. The infrastructure and services should respect the applicable quality standards and UN conventions and shall not lead to segregation or isolation of specific groups.

In addition to financing solutions provided by traditional financial intermediaries, the provision of in-kind services may also qualify organisations, such as education and training institutions, or health, social service and care providers, to benefit indirectly from the EU guarantee through an implementing partner.

The Social Investment and Skills window will put particular emphasis on the inclusiveness of persons in vulnerable situations and their access to quality services, also for inclusion, and accessibility for persons with disabilities and for ageing population.

Support under the Social Investment and Skills window will also support the provision of inclusive education and training, including vocational training, and related services, covering initial and continuing education and training, including for adults, and organisational and process innovation, including new and innovative business models. The Social Investment and Skills window will also support innovative health solutions, such as e-health services and new care models. Support will aim at promoting gender equality and equality on other grounds, broadening self-employment and social integration of persons in vulnerable situations including third-country nationals.

Special attention must be paid to social enterprises and their activities, such as scaling initiatives, fostering the development of digital and entrepreneurial skills for disadvantaged groups to address gender and other diversity gaps in these areas. Support under the Social Investment and Skills window will address Union-wide market failures in social enterprise and social impact financing, microfinance, health, ageing, education and housing funding gaps and innovation through bringing about stronger Union intervention and more efficient market testing aimed at enhancing the Union’s social dimension.

The Social Investment and Skills window will support the demand for and supply of skills, addressing final recipients’ skills deficiencies or improving the skills utilisation and fostering skills-investment markets.

Advisory support may also contribute to exploring new ways for the provision of social services and in general help to develop the supply of and demand for skills, in line with the InvestEU Regulation.

As regards microfinance, the policy objective is to promote quality, sustainable employment and social inclusion by supporting job creation and income-generating activities, in particular for persons in vulnerable situations who wish to start up or develop a micro-enterprise, including on a self-employed basis. In addition, financial intermediaries active in the microfinance space must ensure the provision, directly or indirectly, of non-financial services such as business development services (mentoring, coaching and training), which are an integral part of microfinance. Conditions such as the cost of borrowing (including the lending rate) and collateral requirements for microfinance directly or indirectly supported in the framework of InvestEU must reflect the benefit derived from the support and must be justifiable with regard to underlying risks and the actual cost of funding related to a credit.

As a pre-condition for InvestEU Fund support, financial intermediaries providing microfinance must sign up to (in the case of non-banks) or endorse (in the case of banks) the ‘European code of good conduct for microcredit provision’ (¹⁰⁸) to ensure high ethical lending standards in terms of, among others, governance, management and customer protection. Financial intermediaries shall seek to prevent individuals and undertakings from becoming over-indebted by, among others, taking into account their repayment capacity and ensuring an affordable cost of borrowing.

Support under the Social Investment and Skills window will be in line with the ESF+ objectives, including in its proposed operational objectives to support the development of the market ecosystem relating to the provision of finance for social enterprises and microfinance for micro-enterprises in start-up and development phases, in particular those that employ persons in vulnerable situations. Under the ESF+, the Commission will provide guidance for the development of the social infrastructure (including housing and for health, childcare, long-term care and education and training) needed for the implementation of the European Pillar of Social Rights. However, participation in ESF+ is not a pre-condition for accessing InvestEU Fund support.

Support under the Social Investment and Skills window will also be addressed at social innovation, which may include innovative social solutions and schemes aiming at promoting social impacts and outcomes in order to contribute to achieve the policy objectives of that window.

In pursuing those objectives, the combination of InvestEU Fund support with contributions from donors, philanthropists, foundations and other private sector actors shall be encouraged. InvestEU Fund will seek to strengthen private sector engagement to help deliver on the European Pillar of Social Rights, supporting, among others, quality employment, inclusive education and training, health, social inclusion and active participation in society as well as accessibility and disability inclusiveness. Private-sector actors will be able to contribute to the objectives of the Social Investment and Skills window either through direct contributions (donations, repayable and non-repayable forms of support) and/or co-investments in the projects or financial intermediaries supported indirectly by the InvestEU Fund.

Likewise, grouping of smaller projects is encouraged, as many projects in the social space are too small to attract interest from private investors or to make a more efficient use of public money. For example, social policy reforms area may entail implementation of social infrastructure and services, such as for new social, care and healthcare models, in several locations in the jurisdiction of a national or regional authority through a number of small-sized projects. It may be necessary to group small projects in a single investment proposition to raise interest from investors. Grouping may involve:

• (a) grouping small social infrastructure or technology or social service projects into a single investment proposition that involves a number of sub-projects in different locations;

• (b) grouping investments needs for social infrastructure, technology and social services in a single project or investment proposition. This may require blending of financing sources or instruments;

• (c) grouping investments needs for social infrastructure and services in a larger investment vehicle for urban or rural renewal or development, aimed at social inclusion or under ‘civic match-funding’ schemes.

The actions described in points (a) to (c) of the previous paragraph may be complemented by accompanying measures which aim to (i) help project promoters and financial intermediaries develop skills for configuring investment strategies, blending or hybrid financing, planning and grouping projects; (ii) support the development of social innovators, social enterprises, social impact investors, and philanthropists, including venture philanthropists; and (iii) create a pan-European network of social impact and social innovation relay and coaching centres, innovative education and training services, such as providers of guidance, skills forecasting, skills assessments and validation services or services helping to match the demand for and supply of skills and education-business partnerships and centres of excellence, including centres of vocational excellence.

Those actions may also be complemented by gathering EU-wide data on market failures or suboptimal investment situations in the policy areas linked to the social investment and skills window and making it publicly available.

6.4.1.1.   Strategic investments under the Social Investment and Skills window

Support to education and training will in particular target projects contributing to the digitalisation of the European education and training systems, including promoting digital proficiency from early education years, universal deployment of and access to ICTs in the education and training institutions and remote access and distance-learning tools and platforms. Supported actions should also target other digitisation programmes, aimed at life-long and inclusive access and support in digital skills and solutions for all social groups and ages. Furthermore, support to education and training should facilitate the development of new skills and strengthening of established skills that would ensure the effective functioning of strategic and critical activities set out in Sections 6.1.1.8 and 6.2.1.1 of these investment guidelines.

6.4.2.   Features of potential financial products

6.4.2.1.   Financial intermediaries to be involved

(a) for debt financing:

Financial intermediaries, including national promotional banks and institutions, commercial banks, guarantee societies and institutions, diversified debt funds providing senior and subordinated financing, microfinance institutions, leasing companies, crowd-lending and crowd-equity platforms, SPVs, match-funding vehicles, co-investment funds or schemes, non-banking financial institutions including loan funds, patient capital providers such as cooperatives, credit unions, insurance companies, pension funds, Private Equity/Business Angel funds, funds of funds may apply.

Social investment market enablers (including investment readiness and capacity-building intermediaries active in the microfinance and social enterprise finance space, FinTech companies, higher education instiutions, universities, research centres and EIT Knowledge and Innovation Communities, foundations, crowdfunding platforms, and vocational education and training institutions, including centres of vocational excellence and education-business partnerships) are also eligible. Other groups of investors including corporate investors, social impact investors, (social) business angels, educational entrepreneurs (e.g. Massive Open Online Courses ‘MOOCs’), venture philanthropists and philanthropists may also apply.

Other publicly-owned intermediaries and those operating in social infrastructure, social enterprise finance and social economy space (such as ethical or alternative banks, cooperative banks), which are able to provide financing in the eligible areas covered by the Social Investment and Skills window in full compliance with applicable national and Union legislation and with the relevant requirements of the Financial Regulation, may apply.

The potential public financial intermediaries referred in these guidelines may also play a role in combining InvestEU Fund support with other central Union funding programmes and funds under shared management.

(b) for equity financing:

Financial intermediaries may include, amongst others, national promotional banks and institutions, commercial banks, guarantee societies and institutions, loan funds, debt funds, pension funds, microfinance institutions, leasing companies, crowd-lending and crowd-equity platforms, SPVs, match-funding vehicles, co-investment funds or schemes.

Eligible financial intermediaries for equity financing may also include non-banking financial institutions including patient capital providers such as cooperatives, credit unions, insurance companies and entities to be incorporated, funds-of-funds, private equity funds, venture capital funds, business angel funds, technology transfer funds, co-investment funds or schemes, venture debt funds, other arrangements or schemes that provide investments in equity, quasi-equity, hybrid debt-equity and other forms of mezzanine finance.

Social investment market enablers (including investment readiness and capacity-building intermediaries active in the micro-finance and social enterprise finance space, FinTech companies, higher education instiutions, universities, research centres and EIT Knowledge and Innovation Communities, foundations, crowdfunding platforms, and vocational education and training institutions, including centres of vocational excellence and education-business partnerships) may also be eligible. Other groups of investors including corporate investors, social impact investors, (social) business angels, educational entrepreneurs (e.g. MOOCs), venture philanthropists and philanthropists can act as financial intermediaries in full compliance with applicable national and Union legislation when they are able to generate projects or investment portfolios in the areas covered by the social investments and skills window.

The managers of financial intermediaries (including first time managers or advisors) must demonstrate the capacity and experience to undertake such investments in the area under the Social Investment and Skills window as well as the ability to fundraise and attract private capital, and the prospective ability to become financially viable (including via a sound investment strategy), in order to attract more private investments into the specific asset class.

6.4.2.2.   Final recipients targeted

The Social Investment and Skills window focuses on the support interventions in various policy areas, therefore targeting a wide range of final recipients, which may include:

• (a) natural persons:
• (i) persons in vulnerable situations (such as those experiencing or at risk of social exclusion, including those who are homeless or who live in severe housing deprivation, those who have lost or are at risk of losing their job, or have difficulties entering or re-entering labour market, persons from minority groups, third country nationals, persons in a disadvantaged position with regards to access to the conventional credit market who wish to start up or develop their own micro-enterprises);
• (ii) children, parents, teachers and school administrators;
• (iii) potential or current students and learners (including adult learners).

• (b) enterprises:
• (i) micro-enterprises, including self-employed, especially micro-enterprises which employ vulnerable persons;
• (ii) social enterprises;
• (iii) public enterprises;
• (iv) SMEs;
• (v) Other private-sector companies.

• (c) education, training and related service providers, including European Universities, schools, education and training institutions, including centres of vocational excellence and providers of early childhood education and care;

• (d) SPVs;

• (e) associations, foundations, mutuals and cooperatives;

• f) non-governmental organisations;

• (g) public authorities;

• (h) health authorities, health service providers, social services providers, technology providers, healthcare professionals, patients, private individuals;

• (i) in the field of social infrastructure, the targeted final recipients may be project promoters, public enterprises, operators of buildings/facility managers, social housing providers, PPPs.

Financing and investment operations will also support projects from private and public sector organizations active in the social investment space or in need of such investment.

Such organizations include, among others, SMEs, large corporations, cooperatives, foundations, venture philanthropists, impact-driven enterprises, education and training institutions and providers, triple bottom line ventures, local and municipal authorities.

Their activities cover various sectors and sub-sectors, including, among others, smart and inclusive mobility, urban renewal, rural socioeconomic revitalizing community building and intergenerational solidarity, inclusive communities, homelessness, integration of persons in vulnerable situations including people with disabilities, mental health difficulties and dementia, community development, the integration of third country nationals addressing demographic and migratory challenges and integrating new populations, digital inclusiveness and entrepreneurial skills.

6.4.2.3.   General financial products

Support from the InvestEU Fund will be underpinned by a single EU budgetary guarantee covering financial products that address a diversified portfolio of risks. This may include, among others bank guarantees, loans, equity, mezzanine debt, dedicated funds and investment platforms (which may have a layered structure of FLP, mezzanine tranche and senior debt), investment support into social outcomes contracting schemes and partnerships, working capital, support to the acquisition of tangible and intangible assets, and leasing transactions. Financing transactions shall have a minimum maturity of 12 months, however for specific segments with typical maturity shorter than average, e.g. microfinance, minimum maturity can be reduced to up to 3 months. Particular attention will be given to the provision of patient capital foregoing immediate returns with the expectation of long-term value creation.

That may be done, among others, through dedicated investment vehicles, which may provide loans, equity capital, hybrid capital and risk-sharing instruments for intermediaries or direct financing to final recipients.

Guarantees will enable the implementing partners and intermediaries to target final recipients identified in Section 6.4.2.2 at better financial and non-financial conditions than they would have without the guarantee, thereby passing on the benefit arising from the EU intervention. A reduction of the risk premium charged to the final recipients may be in particular considered for InvestEU Fund-supported operations under the Social Investment and Skills window. In addition, in line with the risk profile of the assets (often of intangible nature) under the Social Investment and Skills window FLP coverage by the guarantee will be possible.

Pilot social outcome contracting schemes may be supported, including investments in payment-by-result schemes and social impact bonds in specific areas, in which public procuring bodies (or also private bodies) pursue social impacts based on pre-defined social outcomes, if they result in additionality in accordance with Annex V to the InvestEU Regulation. They will entail private sector risk taking and shall not fall within the scope of essential social services for which public authorities would have to step in in the event of failure. As long as that is the case, possible areas of intervention may include access to education and training, health and care, migration and integration of third country nationals, employment services, skills upgrading and social services. When targeting social services, pilot social outcome contracting schemes may be launched to test whether an innovative intervention is effective and scalable. Such schemes should provide for transparency as to the set-up, functioning and monitoring of their effectiveness.

(a) for debt financing provided by the implementing partner

Debt instruments supported by the EU guarantee through implementing partners and financial intermediaries will predominantly target projects that are having difficulty obtaining debt finance on the market due to, among others, the lack of collateral, credit history or a high-risk profile or low expected returns.

The EU guarantee may be provided for the financing and investment operations in the form of:

• (a) direct debt (including subordinated loans), bonds, unsecured lending, uncollateralised loans, corporate loans, mezzanine investments, senior loans and credit lines;

• (b) credit enhancement for new investments (to project bonds, bank loans or a combination of the two) and loans for social and educational infrastructure projects, corporate loans, or senior debt and subordinated loans to SPVs and PPP structures (in project financing schemes);

• (c) intermediate debt including framework loans disbursed through financial intermediaries and involving multiple final recipients;

• (d) (counter)-guarantees, on-lending guarantees, funded guarantees and other risk sharing arrangements for schemes implemented by financial intermediaries and guarantees (funded and unfunded) to third party financiers;

• (e) guarantee products covering newly originated loans that may, subject to applicable regulations and with the consent of the relevant national regulators if applicable, provide regulatory capital relief for financial intermediaries;

• (f) targeted guarantee mechanisms that may be devised to enable and support social investments from the endowment base of foundations and philanthropic organisations, helping to reduce the risk of such investments and to pursue a certain level of returns. These will typically be linked to the commitment that returns generated on the side of investors from the use of the guarantee would be spent on grants and non-repayable assistance aligned with InvestEU priority funding areas.

(b) for equity financing provided by the implementing partner

Equity financing must be used to reach critical mass and give the flexibility in funding structures typically associated with bank lending. Equity operations can attract a range of patient capital, used in the pre-bankable- stages of business start-ups in all sectors, allow social enterprises to move gradually away from a grant-based funding approach and enhance their innovation and growth potential.

Potential equity products that may be covered by the EU guarantee include:

• (a) (in)direct equity and quasi-equity investments, hybrid debt-equity and other forms of mezzanine finance in private or public equity funds, private debt funds, venture capital funds, financial intermediaries such as microfinance institutions and social finance providers (e.g. for capacity building purposes, for supporting funds linked to incubators, accelerators or providing incubation services to social enterprises and social innovators, including innovative education, training and related services providers, or for co-investing with social business and angels venture philanthropist and for supporting certain innovative financial solutions). In certain special circumstances, the departure from the traditional pari passu principle towards an asymmetric model of risk and return sharing distribution may also be considered;

• (b) direct equity participations, shareholder equity, convertible shareholder loans and combinations of different types of equity participations issued to the investors. The possibility to allow for asymmetric returns and risk-sharing shall also be considered;

• (c) open equity participations, dormant holdings, shareholder loans and combinations of different types of equity participations issued to the investors and donations, including advanced repayable and non-repayable forms of support. These products shall not involve voting or management rights for the investors (including co-investors).

The implementing partners benefiting from the EU guarantee should rank at least pari passu with other investors. However, under the Social Investment and Skills window, when duly justified, that pari passu principle may not apply, that is to say the investments of implementing partners which are benefiting from the EU guarantee may be in a sub-ordinated position as well as asymmetric with regard to risk and revenues in the waterfall.

The pool of investors willing to invest in the social instruments is currently limited given the return and risk perceptions. In particular, programme implementation will not aim to maximise returns, but rather to achieve a level of return that is sufficient to guarantee alignment of incentives and investor participation. Given that the emphasis will be on generating a social return rather than a financial return, the target portfolio return for an operation may be as low as 0 %.

6.4.2.4.   Thematic financial products

Such products take the form of pilot financial products and platforms to address market failures and suboptimal investment situations, accelerate the development of the social investments market or crowd in more private investment and contribute to tailored finance solutions for social impact (¹⁰⁹).

In case of financing by the implementing partner to support microfinance institutions and social finance providers for their capacity building purposes, the requirement for the implementing partner to provide 5 % own resources contribution to the FLP as mentioned in Section 4.2.2 above does not apply.

• — Regulation (EU) 2018/1092 of the European Parliament and of the Council of 18 July 2018 establishing the European Defence Industrial Development Programme aiming at supporting the competitiveness and innovation capacity of the Union’s defence industry (OJ L 200, 7.8.2018, p. 30, ELI: http://data.europa.eu/eli/reg/2018/1092/oj);

• — Regulation (EU) 2021/697;

• — Regulation (EU) 2023/1525 of the European Parliament and of the Council of 20 July 2023 on supporting ammunition production (ASAP) (OJ L 185, 24.7.2023, p. 7, ELI: http://data.europa.eu/eli/reg/2023/1525/oj);

• — Regulation (EU) 2023/2418 of the European Parliament and of the Council of 18 October 2023 on establishing an instrument for the reinforcement of the European defence industry through common procurement (EDIRPA) (OJ L, 2023/2418, 26.10.2023, ELI: http://data.europa.eu/eli/reg/2023/2418/oj);

• — Council Regulation (EU) 2025/1106 of 27 May 2025 establishing the Security Action for Europe (SAFE) through the Reinforcement of the European Defence Industry Instrument (OJ L, 2025/1106, 28.5.2025, ELI: http://data.europa.eu/eli/reg/2025/1106/oj).

• (a) provision of new, non-segregated and accessible rental social housing stock through one or several of these actions:
• • construction of new buildings;
• • refurbishment or transformation of existing buildings;
• • sourcing of individual housing units from the private housing market (through purchase or mediation);

• (b) set-up of a social rental agency;

• (c) provision of housing-led solutions, combining the provision of rental housing units with enabling support services of proximity (i.e. delivered on-site or made easily accessible);

• (d) adapting existing social housing stock to fit the needs of persons with disabilities, including owner-occupied housing;

• (e) targeted support for marginalised communities that experience severe deprivation in their current housing conditions, including owner-occupied housing.