Financing of foreign investments

Beneficiaries

Any Luxembourg company :

  • who is generally eligible for an intervention by SNCI ;
  • whose main place of business has been in Luxembourg for more than 5 years ;
  • whose annual turnover does not exceed 250 million euros.

The Luxembourg-based mother company has to hold at least 51% of the subsidiary’s share capital, either directly or indirectly over the whole period over which the financing is granted. The subsidiary has to be incorporated as a commercial company.

Purpose

The loans are aimed at co-financing Luxembourg-based companies establishing themselves abroad as part of their development strategy.

Eligible investments

Production equipment and buildings used for a professional purpose, as well as the acquisition of equity stakes done in order to gain control over an existing company are eligible costs.

Evaluation of applications

All applications are analysed by SNCI regarding their national interest as well as their interest for the company. If no general or specific interest for the Luxembourg economy is identified, the application is rejected.

The granting of a loan needs approval from SNCI’s board of directors and of the Ministers of Finance and of the Economy.

Fixing of the loan

There is a double limit for this type of loan:

  • a maximum of 2.5 million euros par project;
  • SNCI’s intervention cannot exceed 50% of the total investment, nor the beneficiary’s part in it.

Debtor

SNCI’s debtor is the Luxembourg-based mother company that uses the funds to either finance the investments abroad or to acquire its foreign subsidiary. SNCI may take a share in a Luxembourg-based company in order to provide for said transactions abroad, but it cannot invest directly in a foreign company.

Duration

The loan’s duration is being fixed according to the useful life of the investment financed as well as according to the business plan, without exceeding ten years.
As far as participating interests are concerned, the general principle of a temporary stake holding rules.

Repayment

In principle, repayment is done by quarterly instalments. A grace period of maximum two years on the repayment of the capital may be granted. Interests are payable at the end of each period. In the case of a stake holding, SNCI may ask the right to sell to the existing shareholders.

Interest rate

SNCI applies market rules to determine applicable rates. The "SNCI prime rate" for medium and long term loans is applicable, increased by an individual risk rate, according to the project’s inherent risk, the country risk and the collaterals offered as well as the reimbursement mode.

Collaterals

Generally speaking a “pari passu” rule is applied.

Application

The application is to be sent directly to SNCI. A detailed description of the planned investment, including its cost, a motivation for the project, a business plan, the financing plan as well as the financial statements of the preceding three years should be included.