European Investment Fund - Birthe Bruhn-Léon Head of Mandate Management docx

European Investment Fund Birthe Bruhn-Léon Head of Mandate Management Brussels, 11/04/2012 EIF Financial Instruments for Employment, Growth and Innovation 1 EU specialised institution for financing SMEs Statutory Objective to ‘Contribute to the pursuit of Community objectives, and ‘…to generate an appropriate return on resources’ Value added and impact focused Authorised Capital € 3bn EIB: 61% EU: 30% 28 Fin. institutions: 9% Including KfW, CDC, Barclays, Intesa Geographic Focus / Intermediaries EU 27, EFTA, Candidate Countries Distributing through Banks and Funds AAA rated – stable outlook Governance Board of 7 ( 4 EIB, 2 EC , 1 FinInst) acting independently EIF at a Glance 2 EIF Tool Kit for SMEs SME Cash Flows SME Development Stages Pre-seed HIGHER RISK Seed Start-up LOWER RISK Emerging Growth Development Private equity funds Microcredit providers Business angels Technology transfer institutions Guarantees & credit enhancement institutions VC seed & early stage funds 3 GIF Equity instrument 2007-2013 – to date Committed budget for 2007-2013: c. EUR 550m EU Invests in own name and at risk and on behalf of EU under GIF EUR 330m signed EIF Incentivised to invest in tech start ups and early/ expansion stage SME; Catalyse co- investment 28 VC funds VC funds Tech start up/early and expansion stage SME benefit from access to equity finance 202 SME Final beneficiaries Investee multiplier: min. 10x Fund Leverage: c. 5x To date, 67 equity funds supported over past 15 years with EUR 690m investments catalysing 5x at fund level 4 Equity instrument 2014-2020  Continuity of public support with critical mass through a fourth generation of EU instrument particularly important in current market situation  Persisting market failure for pre seed, seed and early stage ventures, but also in expansion and growth stages Volumes of EU equity mandates vs. Total VC funding 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2007 2011* Total venture funds raised Publicshare Totalventure(EURbn) Data Source: EVCA PEREP_Analytics 5 Equity instrument 2014-2020 – ctd.  Further impact potential through:  New stages: technology transfer and other pre-SME financing  New investors: e.g. business angel co-investing  New delivery forms: implementation through mandate and/or partnership model (fund of funds)  Additional funds: Re-use of reflows across instrument generations? 6 SMEG Guarantee instrument 2007-2013 - to date Committed budget for 2007-2013: c. EUR 506m EU Extends guarantees: • Loan portfolio guarantees • Microcredit guarantees • Equity guarantees • Securitisations EUR 376m EIF Incentivised to build up loan portfolios 49 agreements with 38 intermediaries Guarantee institutions, promotional banks, banks SME benefit from access to loan finance 190k loans to 170k SME SME Multiplier: avg. 14x To date, about 600,000 SME given access to finance under 122 guarantee agreements for nearly EUR 850m guarantee commitments under the three EU programs since 1998 7 Guarantee instruments 2014-2020  Loan Guarantee Facility  Counterguarantees targeted at guarantee institutions  Loan guarantees targeted at public/private financial institutions (FI) for SME lending  Securitisation window  Guarantee products tailored to intermediary needs  RSI-II Facility  Targeted at defined R&D and innovation-intensive SME and small mid caps (up to 500 employees)  Intermediaries: private and public financial institutions conducting lending/lease activities Ex. CIP-type guarantee RSI – EIF EU-wide portfolio of new SME loans Risk retained by the (FI) EIF guarantee EU guarantee 8 Expectations for Financial Instruments  High EU Added Value through the targets, product and/or implementation form  Targeted programs, but not too narrow (critical mass and impact potential)  Flexible segmentation of windows targeted at different intermediaries and different products (adaptability to market; countercyclical role for VC)  Geographic diversification as a function of the other targets  Use EU budget in best possible catalytic manner: sometimes higher risk taking  Operational implementation delegated to entrusted entity . European Investment Fund Birthe Bruhn-Léon Head of Mandate Management Brussels, 11/04/2012 EIF Financial. business angel co-investing  New delivery forms: implementation through mandate and/or partnership model (fund of funds)  Additional funds: Re-use of reflows