Opportunities for SMEs in different stages of development

Valencia, 20 June 2013

José Cabrita

What is the EIF?

Section One

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What is the EIF?

We’re the leading developer ofrisk financing for entrepreneurshipand innovation across the EU

“”

Fulfillingour dual goal and pursue EUpolicy objectives as well as financial sustainability

Addressingmarket needs by acting as a countercyclicalinvestor in tough economic times

Workingwith financial intermediaries across the 27 EU countries, EFTA and all Accession countries

HelpingSMEs, micro-enterprises and European regions innovate and grow by making finance more accessible

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Our counterparts

We work with a wide range ofcounterparts to support SMEs“ ”

micro-enterprises,

SMEsand small mid-caps

Fund providers and Mandators European Investment

Bank

European Commission

Member States

Managing Authorities

Funds of Funds

Corporates/private

Public institutes

Intermediaries and counterparts Commercial Banks

Development &Promotional Banks

Guarantee Institutions

Leasing Companies

Fund Managers

Microfinance Institutions

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Optimising EC resources

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We manage programmes for the EC that deploySME funding to promote entrepreneurshipand innovation across Europe

“”

The Competitiveness &Innovation Programme(CIP SMEG) Available budget of over

EUR 600m Committed budget of

EUR 420m expected to mobilise EUR 7bn

53 transactions signed in 20 European countries

The Risk-SharingInstrument (RSI)

Pilot project Supporting innovation Launched in Dec 2011,

targeting innovative and research-orientedSMEs and small mid-caps

Progress Microfinance

EUR 200m provided bythe EC and the EIB

Supporting micro-enterprises and thesocial economy

More than 50% committedat June 2012

Strengthening partnershipswith stakeholders

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European Investment Bank

Invest additional Equity and Mezzanine Funds arising from EIB Capital Increase

Optimise joint operations to provideliquidity, risk sharing and capital reliefto SME banks

European Commission 2014-2020

Deploy “Competitiveness for SME’s” (COSME) programme (DG Enterprise)

Key role in financing innovation through Horizon 2020 (DG Research)

Expand microfinance and socialinvestment (DG Employment)

Member States, Accession Countries and national institutions

Equity Fund of Fund tool box Structural fund instruments and management Advisory / know-how transfer Joint initiatives with Development Banks and Guarantee Institutions across the EU

EIF-managed Fund-of-Funds and Holding Funds across Europe

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Fund‐of‐Fund Activity

UK FTF: GBP 200m

ERP (DE): EUR 1000m

LFA-EIF (DE): EUR 50m

Dahlia (FR): EUR 300m

NEOTEC (SP): EUR 183m

PVCi (PT): EUR 111m

iVCi (TR): EUR 160m

Future initiativesLFF (LU): EUR 150m

BIF (LT,LV,EE): EUR100m

DVI (NL): EUR 150m

Holding Funds Supported by Structural Funds (JEREMIE)

BULGARIA: EUR 349m

CALABRIA (I): EUR 45m

CAMPANIA (I): EUR 90m

CYPRUS: EUR 20m

EXTREMADURA (ES) : EUR 10m

GREECE: EUR 250m

LANGUEDOCROUSSILLON (FR): EUR 30m

LITHUANIA: EUR 180m

ROMANIA: EUR 100m

MALTA: EUR 10m

PACA (FR): EUR 20m

SLOVAKIA: EUR 100m

SICILY (I): EUR 60m

SICILY ESF (I): EUR 15m

Helping businessesat every stage

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SME Development StagesPRE-SEED PHASE SEED PHASE START-UP PHASE EMERGING GROWTH DEVELOPMENT

HIGHER RISK LOWER RISK

Public Stock Markets

Business Angels,Technology Transfer

Microcredit

VC Seed & Early Stage

Portfolio Guarantees & Credit Enhancement

Formal VC Funds & Mezzanine Funds

EIF Investment Activity Summary - Spain

Section Two

EIF Investment ActivitySummary - Spain

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Equity – 2012

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EUR 105m of equity resources committed to Spain during the year 2012, with the expectation of mobilising a total of EUR 210m

Venture capital / Neotec Capital Riesgo Adara II: An investment of up to EUR 15m was signed (“dry closing”) in

Q4 2012 Seaya I: An investment of up to EUR 20m was signed (“wet closing”)

in Q4 2012 Mid-market / Mezzanine

An investment of up to EUR 40m was signed in Oquendo II, the first Mezzanine provider fund in Spain

Business Angels A Memorandum of Understanding was signed between the EIF and

ICO for the set-up of the EAF Spain – Fondo Isabel La Católica, the Spanish compartment of the European Angels Fund. Total size of the initiative, after an investment from Neotec / CDTi, is of EUR 30m

Guarantees, Securitisation& Microfinance – 2012

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EIF continues to strongly support Spanish financial institutions through innovative solutions

A securitization deal with Lico Leasing was executed in 2012 (EUR 78m) A guarantee on a credit line with ICO was performed :

Total size of the guarantee of EUR 200m, allowing ICO to release the same amounts from a financial intermediary

Commitment from ICO to use the released funds into new loans to SMEs Represented the implementation of a recently developed in-house product Trade will now be extendable with the collaboration of the EIB

First Spanish Risk Sharing Innovation deal signed in 2012: Up to EUR 120m portfolio (potentially increasing) 50% guarantee rate

EUR 27m CIP counter-guarantee deal signed with CERSA (almost “flow” business…)

Neotec Capital Riesgo

Section Three

Neotec I – OverviewStructure and shareholders

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EUR 50m EUR 126m EUR 7m

GeneralistFunds

Tech / Innov.Funds

YoungFunds

EstablishedTech Funds

Co‐Investments

GeneralistSMEs

Tech / Innov.SMEs

Tech / Innov.SMEs Neotec invests alongside 

pari‐passu

Core Targets

Financing of an array of technology & innovative SMEsvia a number of different Spanish and foreign VC players

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Neotec I – Overview (cont’d)Evolution of monies deployed to companies under Neotec

EUR 174.3m committed to 12 Venture Capital funds

Over EUR 47m invested in more than ultimately 90 portfolio companies

Over EUR 365m invested by the portfolio funds in those same companies

Represents a total programme leverage of 8x

Supported new teams (e.g. Debaeque, Seaya, Active, Cabiedes)

EUR 10m co-invested with 2 Venture Capital funds

EUR 6.6m invested in 4 companies

Proven track record of attracting international blue-chip investors to Spain (e.g. Amadeus, GIMV, Trident, etc.)

Over 68% CAGR in money deployed tocompanies over the last 6 years and…

expected to grow further

EAF Spain – Fondo Isabel la Católica

Section Four

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EAF Spain – Fondo Isabel La CatólicaA Spanish Business Angel Co-Investment Scheme

A Business Angel (“BA”) Co-investment programme dedicated to Spain: Sponsored by Axis (subsidiary of Grupo ICO)

Axis’ mission is to use risk capital in order to provide equity and quasi-equity financing for the expansion and growth of companies incorporated in Spain

Grupo ICO has a long-standing relationship with EIF and a significant history on the development of financing solutions to Spanish companies with the broader EIB Group

EIF and Neotec co-investment

Implemented and advised by the EIF

Scheme for “non-institutionalised” investors that supportsthe development of a well functioning part of the

chain of finance for SMEs and innovation

EAF Spain – Fondo Isabel La Católica (cont’d)Assessment of the market and impact on the landscape

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Spain is the country with the biggest representation in EBAN’s European based members! (c. 14% of representation, followed by 11% UK, 7% Turkey, 6% France and 5% Germany)

Although not the “perfect” indicator, the above serves as a proxy that indicates a strong BA activity in Spain and a market with potential

In any case, initial discussions with Spanish BAs, Spanish BA networks and academic experts indicate that the market is significantly fragmented and it is difficult to find main patterns / trends

Given the above, the implementation of a public scheme with a significant size can have, at this early stage of the development of the Spanish BA market, a meaningful and positive impact in shaping the BA landscape in Spain for years to come

EAF Spain – Fondo Isabel La Católica (cont’d)

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JEREMIE Extremadura

Section Five

Delivering financial engineeringwith Structural Funds

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European CommissionERDF – DG Regio

Managing Authority

Holding Fund / Holding Fund Manager

Financial intermediaries

SMEs and micro-enterprises

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Local Holding Fund Greater delegation to Local Authorities Management/administration are outsourced to

a Holding Fund Manager which is selected bythe Member State / region Holding Fund Manager

Role of the Holding Fund Manager Structure investments, select Financial

Intermediaries Administer, monitor & report on investments Attract a syndicate of financial intermediaries and

investors Closely collaborate with national/regional authorities

JEREMIE Extremadura:Funded Risk Sharing

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Structure FRSP objective is to incentivize banks to extend loans

and similar debt financing to SMEs, through a portfolio credit risk sharing. The FRSP is a loan from EIF to a Financial Intermediary, combined with a risk sharing of the underlying SME loans financed through the FRSP. The Financial Intermediary tops up the EIF loan by the same amount, typically resulting into a 50% co-financing rate.

Eligible Financial Intermediaries Public and private institutions in the member states

which provide loans and financial leases to micro-enterprises and SMEs

Purpose: Support long-term business development (such as

business transfers, investment in tangible assets and investment in intangible assets), and/or working capital linked to development or expansion activities.

Final Beneficiaries: Micro, small or medium-sized enterprisesFRSP Pricing From 0% to the Financial Intermediary pricing on SME

loans. A deposit rate is also charged on the funds drawdown by Intermediary which: i) have not yet been disbursed to SMEs or II) have been repaid by SMEs to Intermediary but not transferred yet to EIF

Financial Benefit to SMEs Differential between market rate and FRSP interest rate

plus any intermediation cost left at the Intermediary level Typically 50% risk coverage

FRSP

Losses

SME Loans

FRSP Interest

Interest

EIF(‘Lender’)

Co financingRate

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

SME Borrower

Matched funding by the Financial Intermediary(1-Co financing rate) Financial

Intermediary‘Borrower’

EIF‘Lender’

Pari-passuLosses*

According to Co financing rate

JEREMIE co-financing in Extremadura: 60%

Contact details

José Cabrita, EIF Resident Representative Madrid Office

j.cabrita@eif.org

Fondo Europeo de InversionesC/ José Ortega y Gasset 29, 6ª

28006 Madrid

+34 91 436 0863

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