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