Riga, 24 November 2010
European
Investment Fund
Presentation to the
SF Monitoring
Committee
1
Agenda
 Holding fund overview
 Equity
 Current status
 Forecasts
 Funded Risk Sharing
 Current status
 Review/changes
 Forecasts
2
Current status/structure of Holding Fund
Holding Fund
(EUR 91.5m)
Debt-related instrument
Financially
Engineered
Instrument
Funded Risk Sharing Product
Selected
Financial
Intermediaries
SEB
EUR 30m
Signature Status = >
End
Beneficiaries
March 26th
Swedbank
EUR 22m
Equity-related instruments
Seed &
Start up
Fund
Risk
Capital
Fund
Imprimatur
EUR 14.7m
Baltcap
EUR 20m
June 11th
January 22nd
March 26th
SMEs
SME Community
3
Holding fund progress by stage
CONTRACT
NEGOTIATION
FUND
RAISING
SIGNATURE
SMEs
TYPE
SELECTION
FRSP
SEB completed
Completed
Given
Completed
Financing
available
FRSP
Swedbank –
completed
Completed
Given
Completed
Financing
available
Risk Capital
Fund
Baltcap –
completed
Completed
Completed
Completed
Financing
available
Seed & Start up
Fund
Imprimatur –
completed
Completed
1st closing
completed
Completed
Financing
available
4
Holding fund progress by amounts
160
150.1
140
120
EUR m
100
91.5
91.5 (100%)
91.5 (100%)
80
63.4
60
40
20
0
Total financing
Approved
projects
Committed
financing
Additional private
capital attracted
+69.3%
Total market
impact
5
Initial forecast made by selected managers
vs actuals for equity transactions, mEUR
7.00
6.00
5.00
mEUR
4.00
Forecast, end2010
Actual, Nov2010
3.00
2.00
1.00
0.00
2010 H1
2010 H2
6
Investment examples
 BaltCap invested EUR 1.4m in Primekss, that has unique,
patented technology for casting slender, tough, jointless
concrete floors for heavy use. The very flat floors improve the
operating efficiency of large automated warehouses and other
commercial and industrial premises. In addition to the
considerable advantages for end users, the technology saves
up to 50% of CO2 emissions during construction, if compared
to traditional concrete slab construction. The new
PrimeComposite technology has already been widely adapted
by leading customers across Scandinavia and Baltics.
 Imprimatur invested EUR 100k in Naco Technologies, a startup technology business commercialising innovative nanocoating technology developed at a leading research institute
Naco_tech in Moscow, Russia. The patented innovation enables nanocoatings on a variety of target materials, with coatings that are
harder and thinner than existing technologies and with a
shorter coating process. This will result in reduced friction
fatigue in equipment used in global industry sectors such as
machinery and engineering, aerospace, oil and gas. v
7
Updated forecast for equity transactions
made by fund managers
30
mEUR
25
20
15
10
5
0
2010 H1
2010 H2
2011 H1
2011 H2
2012
2013
Cumulative disbursed to SMEs
2014
2015
8
Bank’s initial forecast vs actuals for FRS
transactions, mEUR
20
18.5
18
16
14
12.5
12
10
8
6
4
1.4
2
0.5
1.4
0.8
0.8
0.0
0
2010 H1
committed to SMEs, forecast
committed to SMEs, actual
2010 H2
disbursed to SMEs, forecast
disbursed to SMEs, actual
9
Funded Risk Sharing review & changes
 Detailed review in September (6 months from
start)
 Slow progress of lending worse than initially
assessed, thus instrument with current
restrictions expected to reach only ~10%
utilization
 Full review of transactions through senior
level discussion with banks and PSC meeting
 Banks requested relaxation of restrictions:
 discussed with EIF specialists
 financial impact analyzed and modelled
 changes in principle agreed with Project
Steering Committee in October
10
Funded Risk Sharing review & changes,
con’t.
1. Terms that were not part of initial call, changes
enacted already:
 enabling higher risk classes
 removal of other risk related constraints
2. Terms that were included in initial call, like
increase in max loan amount and maturity, DG
Regio agreement on changes procedure
required, formal letter submitted in November
 Changes will be possible to effect only after
DG Regio reply, required asap
 Updated FRS forecasts based on DG Regio
positive response no later than December
2010…
11
Bank’s updated forecasts for FRS
transactions, mEUR
100
94.0
90
94.0
84.0
80
73.5
70
mEUR
60
50
42.0
40
31.5
30
20
10
0
2011 H1
committed to SMEs, forecast
2011 H2
2012
disbursed to SMEs, forecast
12
Summary
 All transactions signed and live, financing
through all instruments available to SMEs
 Latvian SMEs beginning to benefit from
equity investment and debt instruments
 Equity instruments delivering largely as
expected
 Funded Risk Sharing in process of
improvement in order to match the required
utilization – DG Regio support critical!
 More than EUR 110m expected to be
disbursed to SMEs by end of 2012
 Note: 3rd Equity Instrument in process of
being finalised for possible launch in
13
Support slide - Risk Capital Fund
Private
Investment
EUR 10 m
EUR 20 m
allocated
JHF
Risk Capital Fund
(Limited partnership)
SME
SME
SME
SME
- Upside Incentivisation
- No Downside protection
- Professional Management
SME
SME
SME
Focus on high growth sectors
14
Support slide - Seed & Start-up
Fund
EUR 3m
allocated
JHF
SME
University Spin
out focus
40-50 projects
Private
Investment
EUR 5.7 m
Risk Capital Fund
(Limited partnership)
Seed Fund
(Limited
Partnership)
SME
EUR
11.7m
allocated
SME
SME
SME
- Upside Incentivisation
- No Downside protection
- Single Professional
Management
SME
SME
Innovative
Technologies focus
14-16 SMEs
15
Support slide - Funded Risk Sharing
Product (FRSP)
EUR 52 m
allocated
JHF
1. Deposit to Bank(s)
JEREMIE
Combined with Bank’s own
resources
EUR 52 + 52 = 104 m
Resources
Deposit acts as 50%
co-financing
EUR 52 m
2. Loans to SMEs
SME
SME
SME
SME
SME
SME
SME
70% focus on Manufacturing sector
16
Support slide – 3rd Equity
Instrument
EUR 1m5m
JHF
SME
Generalist focus
15-30 projects
(up to EUR
200k)
- Upside Incentivisation
- Single Professional
Management
Co-Investment
Fund
De minimis
Fund
SME
Private Coinvestments
50/50 basis
EUR 5m10m
SME
SME
SME
SME
SME
Generalist focus
12-16 SMEs
(sweet spot 200k-1m)
17
Contact details
 European Investment Fund in Luxembourg
96, Blvd Konrad Adenauer, L-2968
Graham Cope, [email protected] Tel: + 352 42 66 88 236
Martins Jansons, [email protected] Tel + 352 42 66 88
381
 European Investment Fund in Latvia
Valdemara Centre, Kr. Valdemara 21, 6th Floor, LV-1010
Krisjanis Zarins, [email protected] Tel: + 371 670 352 31
18