Greece’s sovereign wealth fund (SWF) aims to launch a catalyser fund by April with the objective of de-risking inbound investment. The first potential projects are already being identified and negotiations underway to grow the €303.5m fund to expand its impact.

The development sees Growthfund, Greece’s SWF, continue the global trend of SWFs using their capital to bring foreign money into initiatives that support national development priorities. The catalyser fund, known as the New Investment Fund, follows in the footsteps of Spain’s Cofides, the UK’s National Wealth Fund and the Indonesia Investment Authority.

Upon its official announcement last year, Growthfund stated it would roll out the catalyser fund sometime in 2025. However SWF’s CEO, Gregory Dimitriadis, tells fDi its activities will start sooner rather than later. 

“We aim to launch the fund in April and be fully operational in Q2. The idea is that within the second half of this year we will be able to move forward with our first couple of investments,” he says. 

The New Investment Fund will focus on green infrastructure and digitisation projects that contribute to the country’s economic growth, with the aim that every €1 of its capital will attract up to €3 in private investment. The SWF will take only minority stakes, and its initial contribution will range from €20m to €50m.

Growthfund has started to identify potential projects and conducted “a market sounding with big players that look to invest in the Greek market”, says Mr Dimitriadis. These discussions have been with local players and foreign investors already active in the country. Once a project pipeline is identified, the fund will start approaching other international investors.

Crisis to catalyser

The New Investment Fund marks a new era for Growthfund, which emerged from the ashes of the Greek debt crisis and now has €5.5bn assets under management. The SWF was founded in 2016 as a condition of EU rescue funding that required the government to create a sovereign fund — similar to Singapore’s Temasek — to improve the operation and governance of state-owned enterprises. 

Like other catalyser funds, the New Investment Fund will target foreign SWFs and other long-term investors, including pension funds. Some are already active in the country, including Canada’s PSP Investment which is the majority owner of Athens airport. 

Instead of encouraging investors to propose their own projects, the New Investment Fund will approach them with specific projects that meet its investment criteria — including financial returns and local impact — and then invite investors to do their own due diligence.

Regarding the types of projects that could be targeted, Mr Dimitriadis named desalination and waste management as examples — given Greece’s water shortage and island economies —  and cross-border projects such as electricity interconnections with other countries. 

The catalyser fund’s launch coincides with Greece’s improving investment prospects. fDi Markets data shows that greenfield FDI has followed a strong upward trajectory since 2015 and that national economic growth is forecast to exceed that of the eurozone this year. In 2023, Fitch and S&P reinstated the country’s investment-grade rating after 13 years in junk status.

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‘Building something much larger’

The New Investment Fund’s €303.5m in seed capital pales in comparison to the multi-billion euro-equivalent catalyser funds operating in the likes of Spain, the UK, Ireland and Asia. 

But Mr Dimitriadis stresses the idea is to start small to build trust among international investors. “It is critical, especially for the first investments, to show that we are doing things right,” he says. 

The initial goal of the New Investment Fund, whose creation and rollout is being assisted by BlackRock, is to create a track record of returns, positive societal impact and strong governance, and to be understood by investors. “That’s why the initial money in this fund is not a lot,” Mr Dimitriadis says, adding: “But we’re building something which is going to be much larger.”

The initial funding is from the proceeds of Growthfund’s sale back to the government of two water utilities. Going forward, Mr Dimitriadis says future funding could come from profits from the SWF’s broader portfolio, privatisations, or external funding which it is discussing with the government and EU institutions. These include the European Stability Mechanism (which holds 54% of Greece’s public debt), European Commission, European Central Bank and European Investment Bank.  

In the short-term, however, Growthfund is focused on making the most of its catalyser fund’s seed capital. “We [must] start by giving the best impression to everyone with the money that we already have been entrusted with … then additional funding will come,” says Mr Dimitriadis.

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