Regulation of the activity and operation of the Co-Investment Fund

Regulation of the activity and operation of the Co-Investment Fund

Resolution of May 24, 2024, by the Secretary of State for Commerce, publishing the Agreement of the Council of Ministers of April 16, 2024, regulating the activity and operation of the Co-Investment Fund, F.C.P.J.

The Spanish economy, like those of other European countries, faces significant global challenges. Geopolitical tensions, the withdrawal of expansive monetary policies, and the increasing importance of sustainability on the international agenda represent risks to the competitiveness of certain economic activities. However, these factors also create opportunities in other sectors, underscoring the need to transform the Spanish productive model to maintain the integration of companies into global value chains and strengthen the competitiveness and resilience of the economy.

In this context, the NextGenerationEU program, approved by the European Council on June 21, 2020, offers a unique opportunity for the transformation of the productive models of the Member States of the European Union, including Spain. This program provides unprecedented community financial resources to support recovery from the crisis caused by COVID-19. In line with this program, the Council of Ministers of Spain approved on April 27, 2021, the Recovery, Transformation, and Resilience Plan, structured into 10 driving policies and 30 components.

On October 17, 2023, the Council of Ministers of Finance of the European Union approved the Proposal for a Council Implementing Decision regarding the Addendum to the Recovery, Transformation, and Resilience Plan. The Addendum envisages the creation of twelve funds aimed at maintaining the level of public and private investment beyond 2023 to consolidate the strategic reindustrialization of the country. One of these funds is the Co-Investment Fund (F.C.P.J.), known as FOCO, which is part of Component 13, Investment 8, with objectives until 2026. The approval of this fund contributes to the fulfillment of milestone L40, which establishes the entry into force of the regulatory framework of FOCO, comprising both the law that creates the Fund and its development regulations.

However, public resources, both national and European, are not sufficient to cover the financing needs for the investments required to modernize the national productive fabric. Therefore, it is necessary to complement these resources with the mobilization of third-party funds. Attracting foreign investment is essential to reinforce the competitiveness of the Spanish economy, always ensuring strategic autonomy.

Royal Decree-Law 8/2023, of December 27, regulates the creation of the Co-Investment Fund (F.C.P.J.), a fund without legal personality, attached to the Ministry of Economy, Trade and Industry through the Secretary of State for Commerce. The objective of the Fund is to attract foreign investment and promote productive modernization, sustainable growth, and the ecological and digital transition of the Spanish economy.

FOCO is designed to co-invest alongside foreign investors in eligible companies. These investments, made under market profitability and risk criteria, will target companies that develop business models aligned with strengthening economic growth, job creation, public and private investment, the modernization of the productive fabric, the dual ecological and digital transition, and the reinforcement of the country’s social and economic resilience. FOCO may invest directly in eligible companies or indirectly, through contributions to investment funds that mobilize resources from foreign investors.

The management of the Fund corresponds to the Spanish Development Finance Company, Cofides, SA, S.M.E. (COFIDES), a state-owned commercial company with public-private capital. COFIDES’ experience in managing other state funds and its specialization in providing financial support to private sector investment projects makes it the ideal entity to channel FOCO’s resources.

The effective implementation of FOCO and similar financial instruments is crucial to ensure that Spain can not only recover the ground lost due to the pandemic but also position itself as a leader in the 21st-century global economy. The combination of public and private investment, both national and foreign, promises a future of sustained growth and resilience for the Spanish economy.