30 November Latest developments of EIF JEREMIE Activities. Hubert Cottogni. Head of Regional Business Development

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1 Hubert Cottogni Head of Regional Business Development 30 November 2010 Latest developments of EIF JEREMIE Activities This presentation was prepared by EIF. The information included in this presentation is based on figures available for September 2009 Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.

2 1/ 23 A word of thanks

3 Contents: latest developments of EIF JEREMIE Activities 1. JEREMIE status quo achievements to date and mandatespecific information 2. JEREMIE challenges today COCOF & looking towards the next programming period with the European Commission Audit challenges 3. JEREMIE outlook for the future: a continued positive impact 2/ 23

4 1. Reflecting on 2010 Many calls for expression of interest in all areas of financial products Number of published calls (cumulative) Calls launched to date*: / 23 0 Q Q * As As at at November 2010 Q Q Q Q Q Q Q Q Q Q Q4 2011

5 1. In 4 years of JEREMIE at the EIF: 86 VC applications received 42 Guarantee applications received 4/ Due Diligences carried out 19 approved transactions Greece Romania Latvia Lithuania Slovakia Languedoc Roussillon (FR) Campania (IT) Cyprus Bulgaria Sicily (IT) Malta

6 1. Holding Funds Portfolio Mix (in %) 5/ 23 Funded Risk Sharing Product (FRSP) Guarantees Risk Capital Fund Microcredit Other Equity Flexible non-allocated funds

7 1. JEREMIE Mandate by Mandate Total JEREMIE Holding Funds: EUR 1.16 bln 6/ 23

8 JEREMIE Greece New Funding Agreement signed with the Hellenic Republic, increasing the HF amount to EUR 250m all-new investment strategy to be drawn up FRSP: evaluation of applicants completed and contractual negotiations about to be initiated Microfinance: call published, deadline of 22/12/2010 Coming soon: FRSP (ICT) and Risk Capital calls to be launched in Q Start-up Early stage Expansion Equity Debt Risk Capital Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 7/ 23 Other instruments Technology Transfer Funding Business Angels

9 JEREMIE Romania Holding Fund amount at EUR 100m FLPG call for expression of interest 4x oversubscribed 9 applicants Due Diligence with Financial Intermediaries under Risk Capital Fund and FLPG Call for Expression of Interest ongoing Coming soon: fundraising for VC instrument Start-up Early stage Expansion Equity Risk Capital Debt Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 8/ 23 Other instruments Technology Transfer Funding Business Angels

10 JEREMIE Latvia Holding Fund amount EUR 91.5m Baltcap made first investment of EUR 1.4m in innovative company Transfer of HF management due in June 2011 Coming soon: Launch of new equity instrument Start-up Early stage Expansion Equity Debt Risk Capital Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 9/ 23 Other instruments Technology Transfer Funding Business Angels

11 JEREMIE Lithuania Holding Fund amount EUR 210m Launch of FLPG Call for Expression of Interest completed Transfer of HF management due in October 2011 Coming soon: launch of new equity Call for Expression of Interest Start-up Early stage Expansion Equity Debt Risk Capital Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 10 / 23 Other instruments Technology Transfer Funding Business Angels

12 JEREMIE Slovakia Holding Fund amount EUR 100m Increase from Ministry of Economy (OP Competitiveness & Economic Growth) to fully replace the intended contribution from Ministry of Environment following government decision Investment Strategy to be updated to account for this new allocation from Ministry of Economy Coming soon: launch of calls for expression of interest for FLPG & VC Start-up Early stage Expansion Equity Risk Capital Micro Finance / Funded Risk-Sharing Products Debt Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 11 / 23 Other instruments Technology Transfer Funding Business Angels

13 JEREMIE Languedoc Roussillon (FR) Holding Fund amount EUR 30m Signature of the Seed Instrument took place in September 2010 & Signature of Risk Capital Fund took place in November 2010 Contractual negotiations initiated with the VC company Launch of Call for Expression of Interest for FLPG completed Coming soon: Selection of the FI for the FLPG instrument Start-up Early stage Expansion Equity Debt Risk Capital Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 12 / 23 Other instruments Technology Transfer Funding Business Angels

14 JEREMIE Campania (IT) Holding Fund Amount EUR 90m Assessment of applications completed for FRSP & FRSP Micro, negotiations started with selected FI for signature IB members to be re-appointed following regional elections Coming soon: Launch of a new Microcredit Call for Expression of Interest Start-up Early stage Expansion Equity Risk Capital Debt Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 13 / 23 Other instruments Technology Transfer Funding Business Angels

15 JEREMIE Cyprus Holding Fund amount EUR 20m FRSP agreement signed with the Bank of Cyprus FLPG Call for Expression of Interest process at advanced stage. Currently evaluating Application received from Bank of Cyprus Coming soon: Complete evaluation of Bank of Cyprus in the context of the FLPG implementation and initiate contractual negotiations Start-up Early stage Expansion Equity Risk Capital Debt Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 14 / 23 Other instruments Technology Transfer Funding Business Angels

16 JEREMIE Bulgaria Holding Fund amount EUR 200m EIF Office opened in Sofia VC Call for Expression of Interest closed : 11 x oversubscribed Launch of Calls for Expression of Interest for Growth Fund, Mezzanine Growth and FLPG Coming soon: subsequent selection of FIs Start-up Early stage Expansion Equity Risk Capital Debt Quasi-equity Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Mezzanine Funds 15 / 23 Other instruments Technology Transfer Funding Business Angels

17 JEREMIE Sicily (IT) Holding Fund amount EUR 60m Investment Strategy finalised Launch of Calls for Expression of Interest for FRS & FRS Micro Coming soon: evaluation and Due Diligence upon closure of calls on 25/02/2011 Start-up Early stage Expansion Equity Debt Risk Capital Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 16 / 23 Other instruments Technology Transfer Funding Business Angels

18 JEREMIE Malta Holding Fund amount EUR 10m Market consultation for FLPG completed Launch of Call for Expression of Interest for the FLPG instrument completed Coming soon: Selection of the FI for the FLPG instrument Start-up Early stage Expansion Equity Risk Capital Debt Micro Finance / Funded Risk-Sharing Products Guarantee / Structured Portfolio Operations Quasi-equity Mezzanine Funds 17 / 23 Other instruments Technology Transfer Funding Business Angels

19 2. The future of JEREMIE Intensive talks with the DG REGIO have been underway since the Autumn to discuss the existing implementation framework and to negotiate on the next EU funding period (i.e ) - primarily via the forum of COCOF (Committee of the Coordination of the Funds). The EIF s JEREMIE team (in collaboration with the EIB s JESSICA team) has been heavily involved in discussing necessary modifications to, and interpretation of, the implementation framework - in order to pave the way for a smooth roll-out of JEREMIE version 2.0. The resulting draft COCOF note has emerged as a complete and comprehensive document which, once approved, will give a clearer guidance for a more efficient implementation of financial engineering instruments throughout Europe. 18 / 23

20 2. JEREMIE Audit Actors MA Control Unit/ Internal Audit National Audit Authority European Court of Auditors DG REGIO Directorate J --Audit Managing Authority European Commission Off B/S EIF Holding Fund EIF SPVs 19 / 23 Holding Fund External Auditor EIF Internal Audit EIF External Audit SPV External Auditor

21 2. JEREMIE Audits to date European Court of Auditors Performance Audit on ERDF: access to finance for SMEs Greece, Lithuania & Slovakia DG REGIO Latvia, Lithuania, Bulgaria & Romania National Audits at OP level Greece (x4), Lithuania (x1), Slovakia (x2), Romania (x1), Bulgaria (x1) Languedoc Roussillon Regional Audit Managing Authority Audits Latvia (x2), Lithuania (x1) KPMG Financial Statement Audit on all JEREMIE mandates 20 / 23

22 3. Outlook for 2011 Next year is set to be a busy year, with many transactions up for approval across all the mandates A high number of calls approved this year will lead to a high number of transactions next year 60 Number of approved transactions (cumulative) / 23 0 Q Q Q Q Q Q Q Q Q Q4 2011

23 3. Amount of Private Finance attracted (leverage) Assurance of eligibility of guarantees = fully fledged leverage Q >2x leverage Q x leverage 3500m 3000m 2500m 2000m 2,031 2, m 1000m 500m 0m 1,624 1, HFs HFs HFs 75 HFs HFs HFs HFs HFs HFs Q Q Q Q Q Q Q Q Q / 23

24 Contact European Investment Fund 96 boulevard Konrad Adenauer L-2968 Luxembourg Regional Business Development Tel.: (+352) Fax: (+352) / 23

25 24 Annexes

26 Funded risk sharing instrument I EUR 20 m allocated JHF 1. Deposit to Bank(s) JEREMIE Resources EUR 10 m Deposit acts as 50% co-financing Combined with Bank s own resources EUR = 20 m 2. Loans to SMEs SME SME SME SME SME SME SME 25

27 First Loss Portfolio Guarantee New Portfolio New Portfolio Stimulates EUR 60m of new SME lending Example Multiplier of 6* Guarantee: 80% up to the cap rate 20% Guarantee: 50% up to the cap rate 33% EUR 10m from JHF EUR 10m from JHF 26 26

28 Asymmetric cash flow model JEREMIE Holding Fund Private Investors Cash flows to fund from inception to or until JHF commitment is fully down VC Fund Cash flows paid Max 70% into escrow as money is drawn Min 30% from JHF Cash flows to fund after or when JHF fully down Escrow Account SMEs 27