Investment Fund PLAN EUROPEO DE RECONSTRUCCIN NEXT GENERATION EU - - PowerPoint PPT Presentation

W e’re the European Investment Fund

PLAN EUROPEO DE RECONSTRUCCIÓN «NEXT GENERATION EU» Oportunidades para la Región de Murcia WebinarsUE, 7 July 2020

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We share risk with FIs*

Backed by the EU, our role is to improve small business access to finance across

• Europe. We do this through

equity and debt risk sharing solutions. We understand small businesses are a high risk lending proposition for financial intermediaries, we

• ffer solutions that alleviate

a portion of the risk.

* Financial intermediaries include banks, leasing companies, micro finance institutions, funds, universities and other financial intermediaries able to lend.

3 Risk sharing with financial institutions

1 in 4* SMEs fail to access the financing they need

Source: *The European Small Business Finance Outlook, the 2019 December edition of the EIF’s research paper covering state of small businesses’ access to finance in Europe

We help improve the funding environment for small businesses by addressing financing gaps

SMEs experiencing significant problems in finding suitable finance solutions, of any nature*

0% 10% 20% 30% 40% 50% FI SK NL DE AT FR BE EA IE ES PT IT GR

HY1/2019

Sharing risk

Gap

Hard to assess SMEs’ risk proposition Due to capital adequacy requirements Information asymmetry Factors adversely affecting access to finance We deliver market driven solutions for lenders in SMEs Scarcity of capital Economic environment Underserved sectors Lack of sector specific financing and targeted financing terms Providing capital relief Building ecosystem

4 Guarantees explained

500+ Funds 500+ Banks

Support EU policy goals Foster long term market sustainability

• European Commission
• European Investment Bank
• Local authorities &

National Promotional Institutions

• Other investors*

Small businesses Our resources Our approach Our partners

*Includes EIF’s own resources and other external resources including private investors. **On aggregate based on 2019 transactions. Depending on the instrument and the transaction, the leverage achieved can range from 4x to 40x. Source: EIF Annual Report 2019.

Our unique approach

We design financial instruments that share risks with our partners multiplying public resources and increasing the supply of finance

5x leverage of public resources**

€1

public resources

We design and deploy

financial instruments

that target funding gaps

Equity

risk sharing

Debt

risk sharing

More than

€5

small businesses

investment and lending to

5 Risk sharing with financial institutions

Our shareholders are Public-private partnership Own resources AAA credit rating** Policy & return objective

Our preferred creditor status allows a 0% risk weighting to assets guaranteed by the EIF

€ 4.5bn*

Our capital base allows us to invest and guarantee alongside

• ur resource partners

Supporting EU objectives while generating a return to

• ur shareholders means we
• perate a commercial

pricing policy and a balance

• f fee and risk based

income

Our statutes and ownership

We have a unique status, policy and return objectives

*20% paid-in. **AAA-rated by three major rating agencies. EIF has a preferred creditor status. ("Multilateral Development Bank") allowing a 0% risk weighting to assets guaranteed by EIF.

6 Risk sharing with financial institutions

Data as of 31/12/2019. Sources: EIF Dashboard Signatures: Net since inception and eif4smes.com. Numbers rounded.

Our collective achievements so far

Together with our partners we have financed more than 1.8m SMEs and mid-caps with EU backed guarantee instruments

Committed so far (€) Leveraged (€)

Total

Debt risk sharing with financial intermediaries

EU backed capped portfolio guarantee EU backed uncapped portfolio guarantees

24.8bn

4.9bn 96.6bn 19.9bn 40.2bn

320,000 2.8m

Supporting

• ver

jobs SMEs and mid-caps

136.8bn

7 Risk sharing with financial institutions

EC guarantee programmes EC equity programmes

EC programmes helping businesses at every stage

8 Current guarantees available

Current EU backed guarantees available

Differentiated loan terms to suit different client types

EU mandates target clients Students, adult learners Skills & Education Pilot Micro enterprises EaSI Social enterprises EaSI High risk & high growth SMEs COSME LGF Cultural and creative sectors SMEs CCS LGF Innovative SMEs, small mid- caps & mid-caps INNOVFIN SMEG

Client size Students SMEs < 10 FTE < €2m turnover < €30m turnover <250 FTE N/A <3,000 FTE Loan size Students < €30K < €25K < €500K < €3m < €2m < €7.5m Eligible financing** Student financing Training projects

• Working capital • Tangible & intangible investments • M&A

9 Current guarantees available

Summary of key guarantee terms

Differentiated terms addressing different market failures

EU mandates target clients Students, adult learners, training

• rganisations

Skills & Education Pilot Micro & social enterprises EaSI High risk & high growth SMEs COSME LGF Cultural and creative sectors SMEs CCS LGF Innovative SMEs, small mid-caps & mid-caps INNOVFIN SMEG

Financial instruments Capped portfolio guarantee Capped portfolio guarantee Capped portfolio guarantee Capped portfolio guarantee Uncapped portfolio guarantee Guarantee rate <80% < 80% < 50% < 70% < 50% Guarantee fee Free of charge Free of charge Free of charge Free of charge 0.5%-1.3%* Guarantee tenure 15 yrs 6/10 yrs 10 yrs 10 yrs 10 yrs Lending conditions Tailored to each individual transaction (e.g. reduction in collateral or increased volumes) Transfer of benefits New riskier product (e.g. collateral reduction, increased maturities, start-up financing) or substantial increase in lending volumes New riskier product (e.g. collateral reduction, increased maturities, start-up financing) or substantial increase in lending volumes Reduced cost of SME & small mid cap lending. Limit on the number transactions with mid- caps Type of financial intermediary Universities, vocational training centres, banks, funds, foundations Microfinance FIs. Small Banks, Co-op banks, foundations, banks, NPIs

• --- Banks, NPIs, leasing companies, guarantee institutions, debt funds ----

10 Current guarantees available

Summary of key guarantee terms Covid-19 enhancements

EU mandates target clients Students, adult learners, training organisations Skills & Education Pilot Micro & social enterprises EaSI High risk & high growth SMEs COSME LGF Cultural and creative sectors SMEs CCS LGF Innovative SMEs, small mid-caps & mid-caps INNOVFIN SMEG

Financial instruments Capped* portfolio guarantee Capped portfolio guarantee Capped portfolio guarantee Capped portfolio guarantee Uncapped portfolio guarantee Guarantee rate <80% < 80% < 50% < 70% < 50%

Improved Covid-19 guarantee rate

< 80% < 90% < 80% < 90% < 80%

Key enhancements

• Improved guarantee

terms for companies investing in skills and education and providers of education

• Coverage of

capitalised interest allowed

• Increase of the
• utstanding

exposure per client to EUR 50,000 / EUR 1,000,000, with the individual transaction remaining capped at EUR 25,000/EUR 500,000

• 1y extension of the

guarantee coverage

• Postponement,

rescheduling or credit holiday period covered (**)

• Coverage of accrued
• r capitalised interest

extended up to 360 days(***)

• Extended roll-over

period for revolving transactions

• Increased cap rate

(****)

• Postponement,

rescheduling or credit holiday period covered (**)

• Coverage of

accrued or capitalised interest extended up to 360 days(***)

• Extended roll-over

period for revolving transactions

• Increased cap rate

(****)

• Postponement,

rescheduling or credit holiday period explicitly allowed (**)

• Coverage of

accrued or capitalised interest extended up to 360 days(***)

• Innovation

eligibility criteria more flexible

• Extended roll-over

period for revolving transactions

* In the form of senior and/or subordinate debt **Applied to existing or new transactions to be covered by the guarantee until the validity of the guarantee. *** provided that no default has been declared no acceleration instilled, this creating incentive for intermediaries to support repayment flexibility **** subject to EIF board approval

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EaSI Financial Instruments

The Employment and Social Innovation financial instruments aim at increasing the availability

• f and access to finance for

vulnerable groups. The EaSI financial instruments comprise EaSI GFI (portfolio guarantee), EaSI funded and EaSI capacity building.

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EIF

European Investment Fund

Portfolio guarantee:

Free-of charge first-loss capped portfolio guarantee

EIF acting as guarantee provider

Banks, non-banks, microfinance institutions, credit cooperatives, social finance providers, etc. Provide access to loans 3 EaSI financial instruments European Investment Fund EIF

Funded instrument:

Unsecured long-term debt and sub- debt for loan portfolio financing

EIF acting as lender

Capacity building:

Equity and quasi equity to eligible FIs to reinforce their institutional and / or indebtedness capacity

EIF acting as investor

FIs Final recipients

Micro enterprises

EaSI financial instruments

Three instruments, one goal

Micro enterprises Social enterprises Self-employed

To find out more please visit us at: www.eif.org European Investment Fund 37B avenue J.F. Kennedy L-2968 Luxembourg Phone: +352 24851 Cristina Dumitrescu Senior Investment Manager Inclusive Finance c.dumitrescu@eif.org

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