Fondo Europeo de Inversiones Madrid, 30 de Octubre de 2013 Marco - PowerPoint PPT Presentation

El Papel del Fondo Europeo de Inversiones Madrid, 30 de Octubre de 2013 Marco Marrone

What is the EIF? Section One 2

A few key facts about us … EU specialised institution for SMEs, risk financing Venture Capital and Mezzanine (fund of funds, business angels) Structuring and Guaranteeing portfolios of SME and microfinance loans/leases Authorised Capital Geographic Focus / € 3bn Intermediaries EIB: 62.1% EU 28, EFTA, EU: 30 % Candidate Countries Fin. institutions: 7.9 % Always working with Financial Intermediaries AAA rated Dual Objective Meeting EU Policy Goals Generating a Satisfactory Return on Equity 3

Helping SME businesses at every stage Public Stock Markets Portfolio Guarantees & Credit Enhancement Formal VC Funds & Mezzanine Funds VC Seed & Early Stage Microcredit Business Angels, Technology Transfer PRE-SEED PHASE SEED PHASE START-UP PHASE EMERGING GROWTH DEVELOPMENT SME Development Stages HIGHER RISK LOWER RISK 4

Our business partners “ We work with a wide range of business partners to support SMEs ” Resources and Business Mandators Partners micro-  EIF own resources  Fund Managers  enterprises, European Investment  Commercial Banks Bank  Development & SMEs  European Commission Promotional Banks  Member States/Regions  Guarantee Institutions and small  Development Agencies  Leasing Companies  mid-caps Corporates/private  Corporates  Public institutions  Business Angels  Other third parties  Microfinance Institutions 5

€ 7bn Net Equity Commitments Venture & Growth Capital Portfolio across Europe at end-2012 EU 27 EU Candidate Countries EFTA/EEA

€ 4.7bn* in Outstanding Guarantee Commitments across Europe at end-2012 Guarantees and Securitisation EU 27 EU Candidate Countries EFTA/EEA Other Countries *Maximum liability

EIF investment activity in Spain  EIF has committed over EUR 520m into 29 independent Spanish Venture Capital , Private Equity and Mezzanine Funds , mainly targeting technology fields (ICT, TMT, Biotech, etc.)  Over EUR 3.0 bn loans to SMEs have benefited from guarantee and securitization activities:  EUR 422.5m have been committed from own funds  EUR 253m covered through EC mandates  Counterparts include blue chips institutions such as ICO, Banco Santander, BBVA or Caixabank as well as government agencies e.g. CERSA At end-2012, EIF was the largest investor in the Spanish VC arena Spain represented, by then, over 12% of the total G&S activity of EIF 8

Sample EIF Transactions Leveraging on EC Resources Section Two

Optimising EU resources “ We manage programmes that deploy SME funding to promote entrepreneurship ” and innovation across Europe JEREMIE Risk-Sharing Comp. & Innovation Progress Instrument (RSI) Programme (CIP) Microfinance   Pilot project Delivering financial  Guarantee and Venture engineering with structural   Joint EIB-EC-EIF initiative Launched in Dec 2011, Capital instruments aiming funds targeting innovative and at promoting  Supporting micro-enterprises  research-oriented Regional / National holding competitiveness, innovation, and the social economy SMEs and small mid-caps funds with greater delegation entrepreneurship and access   EUR 200m made available Target aggregate portfolio of to managing authorities to finance jointly by the EC and the EIB EUR 2.5bn in loans   14 JEREMIE holding funds Available budget of over (guarantee amount of under management for a EUR 1,100m EUR 1.25bn) total of EUR 1,100m 10

JEREMIE: Delivering financial engineering with Structural Funds EU Level Disbursement European Commission ERDF – DG Regio  Up front  Irreversible Local Holding Fund  Greater delegation to Local Authorities Managing Authority or regional Level  Management/administration are outsourced to National a Holding Fund Manager which is selected by the Member State / region Holding Fund Manager Role of the Holding Fund Manager Holding Fund / Holding Fund Manager  Structure investments, select Financial Intermediaries Local Level Regional/  Administer, monitor & report on investments National/ Financial intermediaries  Attract a syndicate of financial intermediaries and investors  Closely collaborate with national/regional authorities /Local Level Regional/ SMEs and micro-enterprises 11

JEREMIE Extremadura: Portfolio Risk Sharing via Banco Santander Santander Co financing and risk sharing rate EIF Co financing and risk sharing rate Structure  PRSL objective is to incentivize banks to extend loans and similar debt financing to SMEs, through a portfolio y Portfolio credit risk sharing. The PRSL is a loan from EIF to a ‘ ’ Intermediar of SME Financial Intermediary, combined with a risk sharing of the underlying SME loans financed through the PRSL. loans The Financial Intermediary tops up the EIF loan issued by Interest PRSL Banco Santande EIF EIF Santande r ‘ ’ SME Borrower ( Lender ) Final Beneficiaries: ‘ ’ PRSL Interest Lender r  SMEs or self-employed incorporated in Extremadura SME Borrower SME Borrower ‘ Borrower Losses Pari - passu ’ SME Borrower Losses* PRSL Pricing  The JEREMIE portion is priced at attractive rates that can be as low as 0% Financial Benefit to SMEs  Differential between market rate and PRSL interest rate plus any intermediation cost left at the Intermediary level  Typically 50% risk coverage JEREMIE co-financing in Extremadura: 60% 12

Risk-Sharing for Innovation (RSI) Innovative and Research oriented SMEs and small Mid-Caps  EIF mandated to implement the RSI Facility  Purpose - improve access to debt finance for innovative SMEs and Small Mid-Caps (Beneficiaries)  Objective : Incentivise financial intermediaries to extend loans and leases to SMEs and small mid-caps with significant Research, Development and Innovation activities (loans from EUR 25k to 7.5m, up to 7y maturity)  EIF provides financial guarantees to selected Financial Intermediaries (FIs)  Transfer of benefit  Acceptable portfolio risk profile 13

RSI case study in Spain Bankinter EIF As guarantor  In the beginning of 2013, a EUR 60m guarantee transaction was signed with Bankinter – total loan portfolio of EUR 120m, guarantee rate 50% of losses incurred in each loan, availability 24 months  Following the success of the transaction and its receptivity by innovative SMEs, a change has recently been approved to increase the guarantee amount to EUR 80m, allowing for a total loan portfolio of EUR 160m Guarantee Rate at 50% on a loan-by-loan basis Risk covered by the Risk retained by Portfolio of SME and mid cap loans issued by Bankinter 14

Competitiveness and Innovation Programme (CIP)  CIP financial instruments managed by EIF on behalf of the EC  Purposes  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  Products  Guarantees: SME Guarantee Facility  Venture capital: High Growth and Innovative SME Facility 15

CIP case study in Spain Counter-guaranteeing CERSA Guarantee Rate at 35% = Guarantee Amount of EUR 385m Risk covered by the Risk retained by Portfolio of counter- CERSA guarantees issued by CERSA Cersa Cap Amount at 7% of 35% = EUR 26.95m Max Portfolio Volume Benefiting from CIP Guarantee: up to EUR 1,100m 16

EIF: 2013 and Beyond Section Three

EIF in 2013 and beyond “ The EIF is fully committed to continue the successful implementation of European Initiatives for ” the new programming period 2014-2020  Legal basis of future funding programme currently being finalised  Discussions between the EIF and the European Commission are at present on-going  Terms and Conditions for each of the programmes under discussion  Interaction with Regions and Member States regarding the next Operational Programme to start soon Risk-Sharing COSME Progress JEREMIE II Instrument II (RSI2) Microfinance  Potentially the successor   Possibility of continuing the Continue the delivery of initiative for the  Good absorption and collaboration with the financial engineering while Competitiveness and receptivity of the current European Commission via leveraging on structural Innovation Programme Progress may lead to a top- an increment of the RSI funds, in partnership with facility up of the programme budget (Horizon 2020?) MS/Regions 18

Contact details Marco Marrone, Head of Southern and Western Europe m.marrone@eif.org Fondo Europeo de Inversiones C/ José Ortega y Gasset 29, 6ª 28006 Madrid +34 91 436 0863 19