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European Investment Fund

Baltic Sea Strategy Working Meeting. Graham Cope Head of Region, Northern Europe. European Investment Fund Europe’s Leading Developer of Risk Financing for Entrepreneurship & Innovation.

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European Investment Fund

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  1. Baltic Sea Strategy Working Meeting Graham Cope Head of Region, Northern Europe European Investment Fund Europe’s Leading Developer of Risk Financing for Entrepreneurship & Innovation This presentation was prepared by EIF. The information included in this presentation is based on figures available for October 2010Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.

  2. EIF’s Core Business is Financial Engineering • EIF is the EU’s specialist institution in Financial Engineering Instruments (FEIs) • EIF manages portfolio of over EUR 16bn of commitments via 500+ Financial Intermediaries • Equity Instruments: Over EUR 4.5bn through 300 Funds • Debt Instruments: Over EUR 11.5bn through 200+ Banks • EIF manages multiple mandates from EU, EIB, Member States & Regions to create FEI portfolios • EIF works closely with EIB on many of these aspects to deliver additional added value

  3. Baltic Sea Region is a coremarket for EIF • Over EUR 500m invested into over 60 equity funds across the region in last few years • Pioneering marketplace: some examples… • Technology Transfer transactions with Chalmers Innovation Seed Fund and the Karolinksa Institute in Sweden • Business Angel Co-investment Fund with Strata in Lithuania • EIF strongly supports EUBSSR process but we can only focus on Priority Area 8: Strategic Project 7.2

  4. The problem is becoming critical… Nordic Innovation Center Study, May 2010 ‘Enhancing cooperation in the Nordic Seed Capital Market’ • “the challenges in the early stages include lack of private financing in the seed stage, difficulties for venture capital funds to secure new funding for the expansion stage, lack of patience and focus as well as scattered resources in publicly funded investment operations.” Nordic Innovation Center Pre-Study, November 2009 ‘Nordic Baltic Investment Fund’ • “ Presently, financing for VC funds has become most difficult to obtain. If action is not taken today, there is a risk of a substantial setback in the development of the Nordic/Baltic risk capital market. A well functioning VC market needs, in the long term, to be attractive to the private sector and particularly to institutional investors worldwide.”

  5. Financial Engineering is vital but not simple • Financial Engineering Instruments are proven to be the best way to maximise financing of SMEs • Creates quality investment process, maximises leverage and improves long term sustainability • Skill is to combine public with private financing that creates sustainable critical mass of investment into SMEs BUT… • We must understand how Financial Intemediaries think • And what Private Investors find attractive (or not) • Without them – it will fail

  6. Baltic Sea Macro-Regional Approach is what the market wants • Cross-border approach is the only way forward • Marketplace wants this solution • SMEs increasingly operate cross-border • Financial Intermediaries all operate cross-border • Insitutional Investment managers need geographical diversification • A fragmented sub-regional approach is not the way forward and we would not recommend it

  7. Basic Concept – under development EIF contribution via RCM mandate One Third Baltic Sea Region National contributions Through agreed percentages or via ‘opt-in’ basis Two thirds Baltic Sea Innovation Fund (Possibly up to €375m but may start at lower level eg: €250m) Could be sector focussed eg: Life Sciences; Mobile; Cleantech VC Fund of Funds Window €180m Business Angel Co-investment facility €50m Technology Transfer Accelerator €20m High growth potential SME Community across the Baltic Sea Region Possible involvement of national agencies

  8. Call to Action • EIF proposes the set up of dedicated Project Team • Involving Skane Region, MoF SWE, NIC and National Agencies • Project team will focus on creating: • Workable Model & Governance Structures • Financing Plan with committed contributors • Launch Timetable & Resourcing plan • This can work – it is time to make it work

  9. Contact Details Graham Cope Head of Region – Northern Europe European Investment Fund 96 boulevard Konrad Adenauer L-2968 Luxembourg cope@eif.org Tel.: (+352) 42 66 88 236 Fax: (+352) 42 66 88 200 www.eif.org

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