JEREMIE Joint European Resources for Micro to Medium Enterprises

2 European Investment Fund at a glance Why JEREMIE? The JEREMIE System and Products Key elements of Choice Current Status & Next Steps

3 Tripartite Shareholding = 61.9% by EIB, 30% by EC, 8.1% various Banks. Subscribed capital: EUR 3 billion Two Primary Objectives:- - The pursuit of Community objectives such as SME creation, regional development, Lisbon Process, growth, employment, knowledge-based economy, innovation, etc. - To generate an appropriate return on its resources EIB subsidiary Triple-A rated MDB, created in 1994 Venture capital and guarantee specialist

4 Resources and Portfolio RESOURCES: EIF plays an active role as resources manager: European Investment Bank Risk Capital mandate EUR 4 bn European Commission Competitiveness & Innovation Programme 2007/2013 Co-investment Facilities with BMWA in Germany, CDTI in Spain, Dahlia in France Overall PORTFOLIO (July 2006) EUR 13.8bn EUR 3.5 bn in Venture Capital (EUR 369m signed in 2005): 237 VC Funds EUR 10.6 bn in Guarantees (EUR 1.7 bn signed in 2005): 165 Banks/Guarantee funds

5 European Investment Fund at a glance Why JEREMIE? The JEREMIE System and Products Key elements of Choice Current Status & Next Steps

6 JEREMIE draws lessons from the past … Under utilisation of financial engineering instruments in Cohesion Policy Grant approach revolving character Difficulties in implementation (regulation, time frame, procedures, expertise)

7 … and sets new objectives: Depart from the grant approach, anticipate decrease in post 2013 funding (EU 15) In new Member States: contribute to Entrepreneurial culture Include Lisbon strategy in Cohesion Policy (innovation) Tailor made rules for financial engineering, including longer time frome 2007/ Flexibility Leverage with EIB and other financial co-investors

8 New Objectives Initiative was launched by the European Commission (DG Regio) and the EIB Group « Joint » because it potentially combines resources from EC, National Public Authorities, EIF, EIB and/or other International Financial Institutions (IFIs), private banks and investors JEREMIE is not an organisation, nor additional funding but a series of coherent actions JEREMIE is an option for each Country

9 European Investment Fund at a glance Why JEREMIE? The JEREMIE System and Products Key elements of Choice Current Status & Next Steps

10 JEREMIE: The System Venture Capital Funds Preparation of Operational Programmes EVALUATION PHASE IMPLEMENTATION OF HOLDING FUNDS DISBURSEMENT PROCESS Microfinance Providers (MCPs) Tech Transfer Activities Guarantee schemes Transforming parts of the ERDF grants into financial products for SME (Lending of national contribution by EIB possible) SME SMEs SME SMEs SME SMEs SME SMEs SME SMEs

11 Preparation : EVALUATION PHASE in cooperation with Managing Authorities EIF carrying-out gap analysis in regions / Member States of potential supply / demand of financial engineered products in SME finance Identification of market driven (revolving) instruments, out of grants system, to « fill the gaps » Evaluation reports: will be freely available to Regions, Programming and Managing authorities, any interested parties (potential Holding Fund, etc…) Evaluation cost covered 75/25 by Commission/EIF PROGRAMME DEVELOPMENT in support of DG REGIO and Managing Authorities Use of conclusions / recommendations made in Interim and final Evaluation report (O.P.) Diagnosis / definition of priorities and operations : ACTION PLAN Active cooperation with stakeholders and Financial Intermediaries

12 JEREMIE Products RISK +- « VENTURE CAPITAL » Guarantee Instruments Tech Transfer Incubators Pre-Seed Business Angels Expansion / Development Capital Early StageSeed Micro Credit for Potential Entrepreneurs HOLDING FUND (HF) Portfolio of Instruments

13 European Investment Fund at a glance Why JEREMIE? The JEREMIE System and Products Key elements of Choice Current Status & Next Steps

14 JEREMIE is an option for member states/regions Others Guarantees Microfinance Instruments Venture Capital Funds Member State selects % for Financial Engineering Via JEREMIE SME Financing Grants ERDF allocation to member state/region Competitiveness O.P. Partly allocated to financial instruments Articulated across various schemes JEREMIE

15 Choice no. 1 for Managing Authorities (JEREMIE or not JERMIE?) No JEREMIEJEREMIE SME Access to Finance Interim Payment Delegation Expertise Use of Market-driven revolving instruments/flexibility Management and administration assumed by Fund Manager Lisbon earmarking Portfolio approach Time delays No upfront payment Less flexibility Fragmentation/case by case approach

16 Key structural benefit: Funds allocated upfront to Fund Holder HF Manager European Commission ERDF – DG Regio European Commission ERDF – DG Regio Managing Authority EU Level National /or regional Level Holding Fund (« HF ») Financial intermediaries National/regional /Local Level Regional /Local Level SMEs Microfinance beneficiaries Structure investments, select Financial Intermediaries Administer, monitor & report on investments Attract a syndicate of investors Closely collaborate with national/regional authorities Role of the HF Manager: Disbursement: Interim payment Irreversible Holding fund: Greater delegation to Managing Authorities Management/administration are outsourced to HF Mgr. (max: 2% fee) THE MANAGER IS SELECTED BY MANAGING AUTHORITIES Programming Authority

17 Choice no. 2 : The selection of the Holding Fund Manager Tender Process (art 44 of regulation) National Public Institutions Or EIF (also possible involvement of EIF as permanent advisor) ! Fund Holder-Manager cannot be at the same time financial intermediary

18 Main Agenda European Investment Fund at a glance Why JEREMIE? The JEREMIE System and Products Key elements of Choice Current Status & Next Steps

19 Status as of Today EIF has formed a JEREMIE team with internal and external specialists All Member states have been approached by EIF to discuss possible implementation of JEREMIE Evaluation Phase to be completed by end of 2007 Some regions and countries have already expressed their readiness to begin the process for operational phase in 2007 (signatures of Memoranda of Understanding)

European Investment Fund JEREMIE 43, avenue J. F. Kennedy L-2968 Luxembourg Tel.: (00 352) Fax: (00 352)