New hedging instrument from KfW to strengthen companies from transformation industries

• Guarantee financing for manufacturers and suppliers of innovative and sustainable technologies
• Melanie Kehr: "By assuming risks KfW is sending a strong signal for technologies of the future"
• Programme encourages private investment as part of the Germany Fund

On 18 December, KfW launches a new promotional programme for medium-sized and large companies. The “Hedging instrument for transformation industries” supports companies in industries that are driving the transition to innovative and more sustainable technologies.

These include companies from the fields of power generation and distribution, hydrogen technology, energy storage, heat and cooling generation, and the automotive industry. The programme is part of the Germany Fund initiated by the Federal Ministry of Finance, the Federal Ministry for Economic Affairs and Energy and KfW. It uses various financing instruments to provide state incentives to attract private capital for investments in important future areas of the German economy.

Banks are often limited when it comes to guarantee financing for large projects. This is precisely where the programme comes into play. Together with other financing partners, KfW provides guarantee financing, including advance payment, contract performance and retention guarantees. The share of risk assumed by KfW is at least EUR 50 million per financed project. KfW’s participation provides companies with an additional offer.

“Through this new promotion instrument, we are specifically supporting manufacturers of technologies of the future. Hedging enables companies to make economically sustainable investments. KfW assumes up to 50 per cent of the risk – a strong signal for innovation and competitiveness in Germany as a centre for technology,”

says Melanie Kehr, KfW Executive Board Member responsible for domestic promotion.

One example: A manufacturer of wind turbines is required by a customer - for example a wind farm operator - to pay a security deposit. This secures the delivery of the wind turbines before the customer applies for a building permit. The manufacturer of the wind turbines requests the security deposit in the form of guarantee financing from its regular bank. If the regular bank is unable to bear the risk from the guarantee alone, KfW steps in. This allows the production and delivery of the turbines for the wind farm.

More information on the product can be found here: www.kfw.de/877 (in German)

Details on the Germany Fund can be found here: Germany Fund | KfW.

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