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Madrid – 21 November 2008 Richard Pelly New Instruments for Chief Executive SME Financing This presentation was prepared by EIF. The information included in this presentation is based on figures available for November 2008 Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct. EIF at a Glance EU specialised institution for SMEs, risk financing Venture Capital and Mezzanine (fund of funds) Structuring and Guaranteeing portfolios of SME and microfinance loans/leases Geographic Focus / Authorised Capital Intermediaries EUR 3bn EU 27, EFTA, EIB: 63.6% Candidate Countries EU: 27.4 % Distributing through Banks Fin. institutions: 9 % and Funds AAA rated AAA rated Staffing, Culture and Values Leading-edge modern institution Attracting talented staff Adapting to changing market conditions High standards of compliance and integrity Dual Objective of Meeting EU Policy Goals & Generating a 1 / 13 Satisfactory Return on Equity Operating Model of EIF Transformational Role of EIF Transformational Suppliers / Key Success Intermediaries Mandators Factors Own Product Commercial banks SMEs resources development EIB (RCM) Mandate Development EC (CIP) management & MA (JEREMIE) Transaction Promotional execution banks MS (ERP) Risk management Guarantee Funds of Funds Follow-up and Institutions relationship focus Fund Managers VALUE ADDED 2 / 13 Competitiveness & Innovation Framework Programme (CIP) Purpose Encourage the competitiveness of European enterprises Support innovation and entrepreneurship activities Provide better access to finance Promote the increased use of renewable energies and energy efficiency The European Commission has mandated the management of the CIP financial instruments to EIF CIP budget - total envelope for VC and Guarantees : EUR 1.1bn to be invested over a period 2007-2013 3 / 13 CIP SME Guarantees Instruments Four products, known as "windows“ ■ Loan Guarantees cover portfolios of SME mid- to long-term debt finance targeting SMEs and focuses on investment financing ■ Micro-Credit Guarantees cover portfolios of micro-credits to encourage financial institutions to provide financing to microenterprises, especially start-ups ■ Equity Guarantees cover portfolios of investments in SMEs in the seed and start-up phases; Quasi Equity Guarantees are available to cover portfolios of mezzanine financing. Equity and Quasi-Equity Guarantees aim to help SMEs improve their financial structure ■ Securitisation: guarantees to support securitisation transactions so that financial institutions may mobilise additional debt financing for SMEs 4 / 13 JEREMIE: Increasing the Deployment of Self-Sustaining Financial Instruments for SMEs The Joint European Resources for Micro to Medium Enterprises Joint initiative of the EU (DG Regio & EIB Group) launched in October 2005 Joint also because it potentially combines resources from the EU, National Public Authorities, EIF, EIB and/or other financial institutions Participation in JEREMIE optional for each country – Holding Fund Management or Technical Assistance Uses European Regional Development Funds for enhancing SME access to finance in New Member States and in Regional Development areas through sustainable and “revolving” financial instruments Creates leverage Encourages move away from grant dependency 5 / 13 JASMINE - Joint Action to Support Microfinance Institutions (MFIs) in Europe Partners European Commission: Technical Assistance (EUR 4-6m) European Parliament: Funding EUR 4m EIB: Funding EUR 20m EIF: Management Support of EUROFI Key Objectives Enhance commercial banks' direct funding of European MFIs through co- financing Invest in Tier II Micro Finance Institutions - small MFIs developing into microfinance banks 6 / 13 Addressing New Needs in 2009 – The Small Business Act Risk Sharing Option for EIB SME Loans Active development of a portfolio guarantee option Small number of pilot banks engaged Mezzanine EUR 1bn facility distributed through funds for: Quasi-equity, without equity sponsors Mezzanine capital for transmission and development transactions Instruments for high growth technology companies in their development stage 7 / 13 Resources and Commitments Venture & Growth Capital Current Commitments Current Commitments Future Opportunities in Spain Future Opportunities in Spain € millions € millions Total Total Spain Spain EU instruments EU instruments ■ Develop further VC/PE industry MAP MAP 256 256 23* 23* through cornerstone investment CIP (since 1/1/08) CIP (since 1/1/08) 115 115 -- & Technical Assistance ■ Develop JEREMIE advisory EIB/EIF EIB/EIF 3,110 3,110 244* 244* services (Canary Islands, Andalucía, Galicia, Cataluña) -- ■ Invest Neotec Fund primarily in Other Other 155 155 Spanish technology companies NEOTEC NEOTEC -- 183** 183** in line with agreed strategy ■ Develop Madrid based team TOTAL 3,636 3,636 267* 267* 8 / 13 * Including NEOTEC ** including EIF € 50m commitment * Including NEOTEC ** including EIF € 50m commitment NEOTEC: Spanish Technology Fund-of-Funds Final closing June 2006 at EUR 183m (EIF sponsor with EUR 50m) Spanish technology fund (TMT, bio-tech and life sciences) EIF managed; Madrid-based Deal flow to major tech and research centres in Spain Shared services centre in Luxembourg for risk management, IT (proprietary Fund-of-Funds system) and legal support Major Spanish blue chips involved 9 / 13 Tapping into future growth Resources and Commitments Guarantees & Securitisation Current Commitments Current Commitments Future Opportunities in Spain Future Opportunities in Spain € millions € millions Total Total Spain Spain EU instruments ■ Build on deep EIB/EIF MAP 7,300 850 relationships with key First loss cap 435 47 commercial banks to support: CIP 792 420 (imminent) ■ Liquidity First loss cap 51 18 EIB/EIF ■ Risk Sharing Credit Enhancement 4,323 280 Insurance ■ Capital Protection TOTAL TOTAL 12,415 12,415 1,550 1,550 10 / 13 COUNTRIES COVERED BY CIP GUARANTEES 4 AGREEMENTS SIGNED for over EUR 792m Signatures ■ FdP (Fonds de Participation) autonomous Belgian public institution ■ KfW - largest promotional bank in Germany ■ SOCAMA (Banque Fédérale des Banques Populaires) French network of 30 mutual guarantee institutions ■ SIAGI (Société Interprofessionelle Artisanale de Garantie d’Investissements) French mutual guarantee institution ■ 2 imminent signatures in Spain In the pipeline ■ Further signatures with Italian, Hungarian and Greek intermediaries 11 / 13 JEREMIE 1. Greece EUR 100m Implementation Map 2. Romania EUR 100m 3. Latvia EUR 203m 4. Lithuania EUR 80m 5. Languedoc Roussillon EUR 30m 12 / 13 Contact European Investment Fund 96 boulevard Konrad Adenauer L-2968 Luxembourg Tel.: (+352) 42 66 881 Fax: (+352) 42 66 88 200 www.eif.org People in Athens, Brussels, Istanbul, Lisbon, 13 / 13 Luxembourg, Madrid, Paris & Rome
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