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EIF

EIF. Riga, 21 January 2010. Presentation to the Monitoring Committee. 1. Overview. JEREMIE Holding Fund in Latvia Current Status Next Steps and Timetable Key points Other EIF activities in Latvia. 2. JEREMIE Holding Fund – Capital Allocations. Holding Fund (EUR 91.5m).

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EIF

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  1. EIF Riga, 21 January 2010 Presentation to the Monitoring Committee 1

  2. Overview • JEREMIE Holding Fund in Latvia • Current Status • Next Steps and Timetable • Key points • Other EIF activities in Latvia 2

  3. JEREMIE Holding Fund – Capital Allocations Holding Fund (EUR 91.5m) Equity-related instruments Debt-related instrument Risk Capital Fund Seed & Start up Fund Financially Engineered Instrument Funded Risk Sharing Product Swedbank EUR 22m SEB EUR 30m Selected Financial Intermediaries Baltcap EUR 20m Imprimatur EUR 14.7m SMEs End Beneficiaries SME Community 3

  4. Risk Capital Fund JHF EUR 20 m allocated Private Investment EUR 10 m Risk Capital Fund (Limited partnership) • Upside Incentivisation • No Downside protection • Professional Management SME SME SME SME SME SME SME Focus on high growth sectors 4

  5. Update on transactions – Risk Capital Fund • EIF Board approval for Baltcap Management Latvia in July 2009 • First closing and signature for Baltcap planned in January • Successful fundraising for private investors • EIF commitment up to 20m EUR, target fund size 30m EUR • Background • 17 applications received • 7 applicants passed to 2nd screening phase • Interviews completed May 7th and May 8th • Due Diligence on BaltCap completed 28/29th May, approved by EIF Board on July 13th 5

  6. Seed & Start-up Fund EUR 3m allocated JHF EUR 11.7m allocated Private Investment EUR 5.7 m Risk Capital Fund (Limited partnership) Seed Fund (Limited Partnership) • Upside Incentivisation • No Downside protection • Single Professional Management SME SME SME SME SME SME SME University Spin out focus 40-50 projects Innovative Technologies focus 14-16 SMEs 6

  7. Update on transactions – Seed & Start up Fund • EIF Board approval for Imprimatur Capital Baltics in end-September 2009 • First closing and signature expected after the necessary financing from private investors will be raised • EIF commitment up to 14.7m EUR, target fund size 20.4m EUR (3m Seed and 17.4m Start-up window) • Legal negotiations near completion • Background • 11 applications received • 3 applicants passed to 2nd screening phase • Interviews completed May 7th and May 8th • Due Diligence completed in July 7

  8. Funded Risk Sharing Product (FRSP) EUR 52 m allocated JHF 1. Deposit to Bank(s) JEREMIE Resources EUR 52 m Combined with Bank’s own resources EUR 52 + 52 = 104 m Deposit acts as 50% co-financing 2. Loans to SMEs SME SME SME SME SME SME SME 70% focus on Manufacturing sector 8

  9. Funded Risk Sharing Funded Risk Sharing Product Product created by EIF over 2009 Nothing more than a flipchart in January 2009 This Product required:- Full exploration by EIF experts and discussions with banks EIF Board approval of product Call process and extensive explanation/marketing Liaison with DG Regio and DG Comp Huge EIF resource commitment, especially lawyers Specially devised standardised contract EIF Board approval of transactions This will support up to EUR 104m of new SME lending in Latvia within 2 year period 9

  10. FRSP – Current Status • SEB approved by EIF Board on 20 October • Legal negotiations under way • Swedbank approved by EIF Board on 14 December • Legal negotiations under way • Background • MoE confirmation on state aid status 22 April • Call launched 6 May 2009, deadline 3 June • 3 banks applied, significant volume interest (oversubscribed) • 2 applicants passed to screening phase • Due diligence and counter-party risk analysis completed 10

  11. Overview • JEREMIE Holding Fund in Latvia • Current Status • Next Steps and Timetable • Key points • Other EIF activities in Latvia 11

  12. Next Steps & Timetable 12

  13. Key Points • Well-structured HF Portfolio • Financial Intermediaries selected • All four transactions going live soon • Key principle of self-sustainability maintained for long term benefit of Latvia 13

  14. Other EIF activities in Latvia • EIF Transactions in 2009 (approx EUR 30m) • CIP Guarantee transaction with the Land and Mortgage Bank • CIP equity transaction with MTVP Fund Managers 14

  15. EIF at a Glance EU specialised institution for SMEs, risk financing Venture Capitaland Mezzanine (fund of funds) Structuring and Guaranteeing portfolios of SME and microfinance loans/leases Authorised Capital € 3bn EIB: 61% EU: 29 % Fin. institutions: 9 % To be issued: 1% Geographic Focus / Intermediaries EU 27, EFTA, Candidate Countries Distributing through Banks and Funds AAA rated Staffing, Culture and Values Leading-edge modern institution Adapting to changing market conditions Attracting talented staff High standards of compliance and integrity Dual Objective of Meeting EU Policy Goals & Generating a Satisfactory Return on Equity 15

  16. EIF currently manages … • Portfolio of over EUR 16 billion in financial engineering transactions • Via close to 500 different financial institutions • Over 300 Equity Transactions via Fund Management Companies • Almost 200 Debt/Guarantee transactions via banks • 10 Member State JEREMIE Holding funds • 5 other European Fund of Funds Mandates • Close to 200 Professional staff via Head Office and local office network 16

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