Invest Week 28 November - 2 December 2016: Daily round up for 28 November

 

Invest Week kicked off on 28 November with three debates: 

  • Financing Growth and Growing Finances: How New Vehicles and Collaboration Will Power Startups, Scale ups and Disruptive Innovation, a high level forum hosted by the European Digital Forum

  • Investment Plan for Europe - are we there yet?, a panel debate hosted by BusinessEurope

  • Capital Markets Union: What’s in it for companies?, a roundtable hosted by European Issuers, AFEP and DAI

 

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Digital Forum debates how to scale up Europe’s innovation ideas

 

At this high-level forum, European venture capitalists, tech entrepreneurs, digital start-ups and investment sector leaders discussed the needs of the burgeoning European start-up community. The overriding question was: how can Europe take forward its brightest ideas and help them grow to scale?

  • Rather than attempting to copy ‘Silicon Valley’, Europe should be true to itself and find its own model.

  • Europe needs to avoid the ‘brain drain’ and fund not just innovation but also growth.

  • The Commission and the European Investment Fund are launching a pan-European venture capital funds of funds to attract private capital back into the market

 

During the discussion, there was acknowledgement that the US appears to have overtaken Europe in recent years in terms of leading in innovation but that, rather than attempting to copy the ‘Silicon Valley’ model and becoming ‘the new US’, Europe should build on its own values. “We worry more than anywhere else in the world about inequality. We are sensitive to climate change. We are a beacon of the circular economy. We should see it as a strength and be proud of it,” said Carlos Moedas, the EU’s Commissioner for Research, Science and Innovation.

 

Michael Collins, Invest Europe’s Chief Executive, took a similar line. As he put it, “today Europe should not fight against innovation but instead evolve and be at the forefront of it. If we do so we will have more control of these evolutions and be able to promote innovation which is in line with our traditions and values”. He added that “policy should not be there to protect certain companies and stifle innovation but instead to foster greater innovation”.

 

A key issue to emerge was how to ensure that Europe focuses on avoiding a ‘brain drain’ and encouraging entrepreneurs to grow businesses in Europe by ensuring that they have financial options available to them. In that context, the European Investment Fund has accumulated a lot of experience with venture capital.

 

As Uli Grabenwarter, Deputy Director, Equity Investments, European Investment Fund, put it: “In the last 20 years in Europe we have confined ourselves to financing innovation and not growth. As a result we have become a powerful incubator for the United States. Europe is now coming to realise this and the need to keep the growth in Europe”.

 

In this context, the European Commission is working with the European Investment Fund on a different approach to supporting venture capital. “Our aim is to establish one or more pan-European venture capital funds of funds, managed independently, with a fund size of at least 500 million euro and a majority of private capital, and operating over five or more European countries,” said Commissioner Moedas. “The Commission’s fund of funds proposal is a great initiative ,” said Michael Collins.

 

‘Financing Growth and Growing Finances: How New Vehicles and Collaboration Will Power Startups, Scale ups and Disruptive Innovation'
hosted by the European Digital Forum

On Monday 28 November

 

 

Moderator:

Paul Hofheinz, President and Co-Founder, the Lisbon Council


Speakers:

Michael Collins, CEO, Invest Europe

Marie Ekeland, Vice-President, France Digitale; Co-Founder, Daphni

Uli Grabenwarter, Deputy Director, Equity Investments, European Investment Fund

Alberto Onetti, Director, Startup Europe Partnership; Chairman and President, Mind The Bridge Foundation

Alexander Rittweger, Founder, Payback; Board Member, AppCard, Inc.

Matthias Ummenhofer, Founder and Managing Director, Mojo Capital

Francisco Velázquez de Cuéllar, Founder and Managing Partner, Axon Partners Group

Klaas de Boer, Managing Partner, Entrepreneurs Fund

Eric Forest, Chairman and CEO, EnterNext

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Investment Plan for Europe – Are we there yet?

 

While investment is slowly picking up, it remains far below what the European economy needs. The Investment Plan for Europe, which was launched in 2014, was a major initiative. The main aim of this event was to evaluate its results.

 

  • Investment remains below pre-crisis levels and the investment gap continues to be wide.

  • The European Fund for Strategic Investment is proving to be a good tool.

  • Businesses still face significant barriers to investment and the single market remains fragmented.

 

Speakers agreed on the importance of the Investment Plan for Europe and that it remains an important issue. The initial results of the European Fund for Strategic Investment (EFSI) are promising and it should be extended, possibly beyond 2020. However, the EFSI is only a tool and it should not replace policy frameworks which can lead to structural improvements at the national and regional level.

 

The speakers underlined the need for the new EFSI (dubbed ‘EFSI 2.0’) to continue to be based on the marketplace, which is “key for its success”, according to W.Molterer, EFSI’s Managing Director. They also agreed that sectoral or geographical quotas should therefore be ruled out and the way in which the EFSI is carried out should continue to be simple. They also referred to the need for cooperation in order to collectively boost investment. MEP Mercedes Bresso said that, "if we want to relaunch investment we need the private and public sector working together".

 

Speakers highlighted that there are still several barriers to investment in Europe, which are preventing companies from investing in and going to other parts of the EU. Markus J. Beyrer, the Director General of BusinessEurope, emphasised: “Uncertainty is a reason behind weak investment, but it is not the whole story. A lot of it is structural. We have too many real barriers and fragmentation in the single market.”

 

Panel Discussion

Hosted by BusinessEurope,

on Monday, 28 November 2016

 

MARKUS J. BEYRER, Director General of BusinessEurope

MERCEDES BRESSO, Member of the European Parliament (tbc)

ALBERTO MAZZOLA, International Affairs Senior Vice President, Ferrovie dello Stato Italiane and EESC rapporteur for the EFSI extension

WILHELM MOLTERER, Managing Director of the European Fund for Strategic Investment

PER THIESEN, Executive Vice President & CFOO, Terma - aerospace, defense and security

 

Moderated by David Rinaldi Research Fellow at CEPS

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Capital Markets Union discussion looks at companies and reporting requirements

 

The Capital Markets Union (CMU) project aims to stimulate the flow of capital throughout the European Union by making it easier for companies to raise finance in capital markets. The roundtable looked at the merits of having a CMU, at how companies should be dealt with in the CMU and the need to reduce excessive reporting requirements.

 

  • Capital Markets Union needed to help EU compete at the global level

  • Commission acknowledges need for “lighter touch regime” for mid-sized companies on the capital markets

  • Company prospectuses are an example of where reporting requirements can be eased

 

Niall Bohan, the Head of Unit responsible for the European Commission’s Capital Markets Union project, explained that the financial crisis had taken its toll on banks’ financial capacity and that there was a need for non-bank finance to ensure that long-term institutional money and surplus household savings can be reallocated to the real economy (e.g. into SMEs and energy infrastructure).

 

MEP Michael Theurer argued that the CMU was needed “to increase capital market finance in the EU vis a vis bank loans”. Currently around 30% of company finance is raised through capital markets and 70% through bank loans, the reverse of the situation in the US. He called for a review of financial legislation to encourage long-term investment, notably CRR and Solvency II, for a moratorium on banks’ prudential requirements and for swift progress on securitisation and insolvency.

 

Mr Bohan also acknowledged the need “to make the CMU relevant for a cohort of mid-sized companies”, that “smaller companies need a lighter touch regime”. He said that the Commission’s call for evidence on the regulatory framework on financial services recognised a need to do more on that.

 

“The EU needs the CMU to compete with countries like the US, China and Russia,” said Luc Vansteenkiste, the Chairman of EuropeanIssuers. He called for abandoning the public country by country reporting initiative, as it would not bring any benefit in terms of fight against tax avoidance but would endanger the competitiveness of EU companies. In terms of administrative burdens and reporting requirements, he felt that small and medium-sized quoted companies should be given separate treatment and that a single legal EU definition of who those companies are is needed for that purpose. He also argued that, in terms of the balance between investors and companies, “the focus has become too much on disclosure, while investor protection could be better achieved by financial education.” As an example, he mentioned company prospectuses that are costly but that no-one reads

 

Martin Wilhelmi, Senior Legal Counsel in Allianz SE’s Legal and Compliance Department, picked up on that point and said that company prospectuses are written for potential litigation cases, “are written for lawyers by lawyers and are not addressed to investors”. As an example, he cited a 900-page document issued by Commerzbank containing 300 pages of financial information that had already been disclosed on the company’s home page. He said the current review of the Prospectus should focus on essential information on risks and securities and deliver a more relevant summary.

The ongoing revision of the EU’s Prospectus Directive aims to make company prospectuses shorter and less heavy, although it is now being questioned whether it will deliver

 

On the issue of a possible Financial Transaction Tax being discussed by ten EU countries, Mr Vansteenkiste said that it is “not a level playing field if you pay taxes in one country and not in another”. “If there is a tax on transactions, it should be all or no countries but not ten out of 28 countries.”

 

Capital Markets Union: ‘What’s in it for companies?’
Roundtable hosted by the European Issuers, AFEP (French Association of Large Companies) and Deutsches Aktieninstitut
on Monday 28 November
at the House of German Business, Brussels

 

Moderator:

Lé Quang Tran Van, Director for Financial Affairs, AFEP (French Association of Large Companies)

 

Speakers:
Michael Theurer, MEP (ALDE Group, Germany)
Niall Bohan, Head of Unit for the Capital Markets Union at the European Commission’s DG FISMA
Luc Vansteenkiste, Chairman of EuropeanIssuers
Martin Wilhelmi, Senior Legal Counsel in Allianz SE’s Legal and Compliance Department

 

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Invest Europe media dinner on a tram launches Invest Week in Brussels

 

Invest Europe held a press dinner in Brussels to launch Invest Week. Devised by Europe, Invest Week includes a whole host of high level speakers and subject specialists examining Europe’s attractiveness as a place for investment.

 

Invest Europe’s new Chief Executive Michael Collins addressed journalists before the dinner on a specially converted privately hired tram. Journalists toured Brussels on the tram and were served a six-course gastronomic menu designed by a top Belgian chef. During the tram ride, they were given an outline of the different events that they might find interesting during Invest Week.

 

Speakers during the week will include Jyrki Katainen, European Commission Vice-President responsible for Jobs, Growth, Investment and Competitiveness ; Michael Collins, CEO of Invest Europe ; Gerry Murphy, Senior Managing Director & Chairman of the Blackstone Group International Partners LLP ; David Rubenstein, co-founder and co-CEO of The Carlyle Group, one of the world’s largest private equity firms; and Frédéric Mazzella, Founder and CEO of the carpooling service BlaBlaCar.

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Daily round up for 28 November