hubert cottogni, european investment fund
TRANSCRIPT
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Hubert CottogniDeputy Director
Head of Regional BusinessDevelopment
EuropeanInvestment
Fund
This presentation was prepared by EIF. The information included in this presentation is based on figures available for October 2012.
Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.
1st SME Assembly &European Enterprise
Promotion Awards 2012
15-16November
2012,Nicosia
,Cyprus
GROWING THROUGH FINANCE
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Growing through finance
what action should be taken to get finance to SMEs to help them grow?
1. European Investment Fund
2. The JEREMIE model
3. EIFs intervention in financing in Cyprus
4. Case study: Languedoc Roussillon (Fr)
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1. EIFs Business
EIFs main objective is to support SMEsfinancing.
Through its commitment EIF acts as a catalystattracting additional private investments andachieving a broad impact.
EIF operates via guarantees and credit
enhancement activity: EIF is a major provider of
SME loan portfolio guarantees,
Credit enhancement, and
Microfinance.
EIF also operates via equity activity: Private Equity and Mezzanine (fund of funds),
EIF is the leading European fund-of-funds investorin private equity and growth capital.
Europes Leading Developer of Risk Financingfor Entrepreneurship & Innovation
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VALUE ADDED
Own resources
EIB (RCM, MEZ)
EC (CIP)
MA (JEREMIE)
MS (ERP)
Funds of Funds
Regional (LfA)
Product Development
Mandate Management
Transaction Execution
Risk Management
Follow-up &
Relationship Focus
Commercial Banks
Development &
Promotional Banks
Guarantee Institutions
Fund Managers
SMEs
Suppliers /Mandators
Transformational
Key SuccessFactors
Intermediaries
Transformational Role of EIF
1. Operating model of EIF
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EIF Managed FoFs
UK FTF GBP 200m
ERP (DE) EUR 1000m
LfA-EIF(DE) EUR 100m
Dahlia (FR) EUR 300m
NEOTEC (SP) EUR 183 m
PVCi (PT) EU R 111m
iVCi (TR) EUR 160m
New Funds in 2012
MDD (DE) EUR 200m
IFL (LU) EUR 120m
DVCi (NL) EUR 150m
Baltic InnovationFund EUR 100m
EIF Managed JEREMI
Holding Fund (FoFs)
Greece EUR 250m
Romania EUR 100m
Lithuania EUR 210m
Slovakia EUR 100m
LanguedocRoussillon (FR) EUR 30m
Campania (I) EUR 90m
Cyprus EUR 20m
Bulgaria EUR 199m
Sicily (I) EUR 60m
Malta EUR 10m
Sicily ESF EUR 15m
Calabria (I) EUR 45m
PACA (FR) EUR 20m
1. EIF managed European Fund-of-Fundsprogrammes
EIF FoFs EIF JEREMIE
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2. EIFs management approach toJEREMIE Holding Funds
StructuralFunds
ERDF (& ESF)
Holding Fund
NationalContribution
Investment Board
Financialintermediaries
SMEs
Holding FundManager( HF )
Tailor-made portfoliosof financial engineering
instruments to meet
SME needs
Strong governancethrough Investment
Board process
Transparent callprocess to select bestfinancial intermediaries
Professionalnegotiation of contractsleading to contract
signatures
A network of privateinvestors to manageand mobilise structural
funds
Quick response to
adverse economicclimate
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3. EIFs intervention in financing in
Cyprus
JEREMIE Holding Fund EUR 20m via Bank of Cyprus Funded Risk Sharing Product for EUR 10m
First Loss Portfolio Guarantee for start-ups EUR 2m
First Loss Portfolio Guarantee for SMEs EUR 6m
= Total leveraged amount EUR 71m a leverage factor ofx4
Progress via Central Cooperative Bank EUR 16m
Status quo: portfolio of EUR 23m has reached over 400micro enterprises and SMEs, with EUR 64m still available
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4. Case study
Languedoc-Roussillon:
background South of France; borders: PACA, Rhne-Alpes, Auvergne, Midi-Pyrnes, Catalua
Main features
Inhabitants: 2.5m(10th region in France)
Demog. growth: 12.3% over last 10 years (1994-2004)vs 4.8% in France (1st region in France)
Unemployment rate in 2006 : 13% vs 9.5% in France
Only 96 firms (0.08%) with more than 200 employees
But :
Attractive region for innovation:
Infrastructures: scientific parks & incubators
Universities: medicine, biology; high level engineering schools
A region committed to support innovation:
World class clusters More than 7,000 researchers (highest density in France)
The most important growth of R&D expenses in France (more than 50% during
the last 3 years)
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4. Gap analysis: main
conclusions Debt:
Support the financing of innovative start-ups by
increasing the available resources in the segment
ofseed technological or innovative projects.
Equity:
Promote equity or quasi equity to support the
emergence of a small supply of financing for high-
potential SMEs.
Guarantee:
Facilitate SMEs access to finance more easily
(under better terms, both by means of lower
prices and/or lower collateral)
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4. JEREMIE LR: the
investment strategy
Inception Start up Development
Debt
Equity
Guarantee
Co-investment instrument
Funded Risk SharingSeed
Guarantee Instrument FLPG(First Loss portfolio guarantee)
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SMECashFlows
SME Development Stages
Pre-seed Phase Seed Phase Start-up Phase Emerging Growth
JEREMIE LREUR 27 m
Private moneyEUR 116m
Development
EUR 4m Seed loans forentrepreneurs/SMEs with an innovative
project.
EUR22m Co-investment for
SMEs with high potential ofgrowth.
Access to early stage equity funding &
support of development needs of
established companies through equity
Support of development needs of
established companies (mainly) through
guarantee products
Development of entrepreneurship
culture
Use of smart money instead of
grants
Support of innovative businessconcepts
4. JEREMIE LR: Product portfolio
EUR117m facilitate SMEs access to finance at
preferential conditions: finance the whole economy,reinforce competitiveness, face against unemployment.
4.3x portfolio multipliereffect
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4. JEREMIE : the implementation concept
Structural Funds
ERDF
JEREMIE Holding Fund LR (JHF): EUR 30m
EUR 15m
Contribution fromthe LR Region:
EUR 15m+
ERDF
Managing
Authority
Investment Board (COPIL): French State / REGION / EIF
Seed loans
Instrument:
EUR 2mLeverage of 2
i.e.
EUR 4m forLRs SMEs
Co-investment
Instrument:
EUR 11mLeverage of 2
i.e.
EUR 22m forLRs SMEs
Guarantee
Instrument:
EUR 14mLeverage of 8.4
i.e.
EUR 117m forLRs SMEs
i.e. a total ofEUR 143m forLRs SMEs
Holding FundManager(EIF)
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4. Progress achieved (end of October2012)Seed loans
62 entrepreneurs financed (for projects with a significant
component of innovation)
EUR 737 750 disbursed (JEREMIE part) EUR 1 475 500 total amount Leverage (direct): 2x
To be noted: First amounts are reimbursed to the JEREMIE HF
from the FIs
Co-investment Instrument 16 investments into SMEs with a high potential of development
EUR 3 750 000 invested directly by JEREMIE EUR 16 035 017 : total amount invested JEREMIE + Private co-investors
Leverage: 4.2x (expected at the beginning only 2x) To be noted: Significant interest from the private market ( included
VC firms based outside LR)
Guarantee Instrument 237 SMEs financed
EUR 24 299 926 : total loan amount disbursed to SMEs (coveredby JEREMIE)
Direct leverage : 8.4x
To be noted : Significant advantage passed onto LRs SMEs
(interest rate reduction + reduction of personal collateralrequirement)
TOTAL: 315 SMEs/entrepreneurs financed
EUR 41 810 443 disbursed to SMEs out of EUR 143m by end2015
Demand for credit in the
Euro zone and in France
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Contacts
European Investment Fund
96 boulevard Konrad Adenauer
L-2968 Luxembourg
www.eif.org