The Northwest Regional Development Agency (NWDA) has established and notified to the Commission the Northwest Urban Investment Fund (NWUIF), a £100 million Holding Fund which will be managed by the European Investment Bank. The NWUIF will receive £50 million funding from the European Regional Development Fund and the equivalent match funding of £50 million from the NWDA.

The NWUIF will target regeneration projects in the Northwest of England with a financial viability gap that would not be undertaken by the market on its own. Private investors will finance at least 50 per cent of each project costs, thus creating a leverage effect. In addition, each project must have a business plan to ensure the repayment of the public investment. Incentives for private investors will be limited to the minimum necessary to trigger urban projects and may not exceed a "Fair Rate of Return", established through a competitive process or, where it is not possible, by an independent expert. Professional and independent fund managers will ensure prudent investment decisions and the financial sustainability of the funds.

The Commission has considered that aid granted pursuant to this initiative in the form of sub-commercial loans and equity capital is compatible with Article 107(3)(c) of the Treaty on the Functioning of the European Union, being "aid to facilitate the development of certain economic areas, where such aid does not adversely affect trading conditions to an extent that is contrary to the common interest".

Note the emphasis of the NWUIF conditions on the "market investor principal", which is that aid that would have been made by a private investor is not unlawful state aid. This is best demonstrated by co-investment with private investors, but also supported by competitive tendering processes and independent expert involvement.