Practical guidance on how to assess the existence of aid for risk financing measures

Available languages: FR

On 26 January 2024, the Commission adopted practical guidance for Member States on assessing the existence of State aid for measures aimed at facilitating access to financing for certain businesses.

Risk financing measures are particularly important as they enable States to support innovative start-ups, small and medium-sized enterprises (SMEs) and middle-sized enterprises (mid-caps) in the early stages of their development, to make the most of their growth potential, and to lead ecological and digital transitions.

These aid may be considered compatible with the internal market under the General Block Exemption Regulation (GBER), which exempts aid to SMEs and start-ups from the obligation to notify the Commission under certain conditions, or under risk finance guidelines that allow aid to innovative SMEs and small mid-caps under certain conditions.

These risk financing measures may not be classified as State aid and may not be subject to Commission control if the Member State behaves like a private operator in a market economy. The practical guidance aims to further clarify the conditions for applying the private operator principle to this type of investment.

I. The Market Economy Operator Test

In its 2016 Notice on the concept of State aid, the Commission explains that a Member State can make economic investments without these public interventions being considered State aid if the State acts like a private operator and receives market-rate compensation for the risk it assumes. This concept was developed by the European Commission in the 1980s regarding equity participations and later expanded to all kinds of public transactions: loans, guarantees, purchases or sales of goods or services, waivers of debt, etc. In its 2016 Notice, the Commission formalises its decision-making practice and European case law on the private operator test in a market economy.

In its new practical guidance, the Commission provides more detail on the application of the private operator test in a market economy to risk financing measures. To this end, the guidance provides Member States with specific elements on how this test can be applied to such measures.

II. The benchmark private investors

Private investors considered for this assessment include credit institutions investing at their own risk and with their own resources, foundations and private funds, family offices and business angels, insurance companies, pension funds, academic institutions and natural persons.

Regarding investments from institutional investors such as the European Investment Bank (EIB) and the European Investment Fund (EIF), even though they are not strictly private investors, the Commission accepts considering them as pari passu reference for the private operator test in a market economy.

III. Evaluating the existence of aid in a pari passu operation with public and private investors

For an investment to comply with the private operator test in a market economy, the Commission believes it must be decided and implemented simultaneously by both public and private investors. Thus, in its communication on the concept of State aid, the Commission outlines the conditions for an investment to be considered as pari passu, in which case it can exclude the existence of aid. Indeed, if the investment is profitable enough for a private operator, it is presumed to be so for the public investor as well.

Firstly, risk financing measures can be considered pari passu only if the terms and conditions of the operation are identical for both public and private investors. In other words, they must share the same risks and benefits and have the same level of subordination regarding the same risk class.

Secondly, for risk financing measures from public and private investors to be considered pari passu, they must be carried out simultaneously in the target companies.

Additionally, risk financing measures can be deemed pari passu only if the private operators' participation has real economic significance. The Commission suggests that a private investment representing at least 30% of the total investment volume holds real economic significance. This threshold is assessed concerning the intervention of public and private investors in the final beneficiary company. Moreover, the practical guidelines state that investments with public resources, such as those from the EIB and/or EIF, meet the pari passu conditions if they are accompanied by at least an equal proportion of real private investors.

Lastly, for risk financing measures to be considered pari passu, the initial positions of public and private investors regarding the investment must be similar, taking into account factors such as their previous economic exposure to the concerned company, possible synergies, etc.

IV. Evaluating the existence of an aid in a selection procedure

In its practical guidelines, the Commission emphasises that the compliance of risk financing measures with market conditions can also be established when private investors, financial intermediaries and/or their managers are selected through a competitive, transparent, non-discriminatory and unconditional tender process.

Furthermore, the Commission's practical guidelines reiterate that, in principle, the financial intermediary is considered solely as a vehicle for transferring public support, in which case the existence of an aid can be excluded at its level. However, direct transfer measures to a financial intermediary can constitute aid if they are not carried out under normal market conditions.

When the financial intermediary or its manager are public entities that have not been selected through a procedure meeting the aforementioned criteria, the Commission's practical guidelines indicate that their management fees must be capped. Their remuneration must reflect normal market conditions, and they must be commercially independent to escape the qualification of State aid.


The European Commission adopted, at the end of 2021, its Guidelines on State aid to promote risk finance investments. Effective from 1 January 2022, the guidelines do not provide detail of the application of the private operator principle in a market economy to this specific type of financing. Therefore, the Commission's new guidance is welcome in assisting public authorities to determine the existence or absence of State aid in their risk financing projects and to draw any necessary conclusions in cases where ensuring compliance of public financing with State aid constraints is necessary to guarantee the legal security of such financing.