JEREMIEJoint European Resources for Micro to Medium Enterprises

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• European Investment Fund at a glance

• Why JEREMIE?

• The JEREMIE System and Products

• Key elements of Choice

• Current Status & Next Steps

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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 subsidiaryTriple-A rated MDB, created in 1994Venture capital and guarantee specialist

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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

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• European Investment Fund at a glance

• Why JEREMIE?

• The JEREMIE System and Products

• Key elements of Choice

• Current Status & Next Steps

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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)

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… 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 2007/2013 + 2

• Flexibility • Leverage with EIB and other financial co-investors

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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

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• European Investment Fund at a glance

• Why JEREMIE?

• The JEREMIE System and Products

• Key elements of Choice

• Current Status & Next Steps

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JEREMIE: The System

Venture CapitalFunds

Preparation of

Operational Programmes

EVALUATION PHASE

2006 2007 - 2013

IMPLEMENTATION OF HOLDING FUNDS

DISBURSEMENT PROCESS

MicrofinanceProviders(MCPs)

Tech TransferActivities

Guarantee schemes

Transforming parts of the ERDF grantsinto financial products for SME

(Lending of national contribution by EIB possible)

SMESMEs

SMESMEs

SMESMEs

SMESMEs

SMESMEs

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Preparation 2006-2007:

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 DEVELOPMENTin 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

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JEREMIE Products

RISK+ -

« VENTURE CAPITAL »

Guarantee Instruments

Tech TransferIncubatorsPre-Seed

BusinessAngels

Expansion /Development

Capital

Early StageSeedMicro Credit for Potential Entrepreneurs

HOLDING FUND (HF)

Portfolio of InstrumentsPortfolio of Instruments

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• European Investment Fund at a glance

• Why JEREMIE?

• The JEREMIE System and Products

• Key elements of Choice

• Current Status & Next Steps

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JEREMIE is an option for member states/regions

Others

Guarantees

Microfinance

Instruments

Venture

Capital

FundsMember State selects

% for Financial Engineering

Via

JEREMIE

SMEFinancing

Grants

ERDF allocation to member state/region

Competitiveness

O.P.

Partly allocated to financial instruments

Articulated across various schemes

JEREMIE

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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

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Key structural benefit: Funds allocated upfront to Fund Holder

HF Manager

HF Manager

European CommissionERDF – DG Regio

European CommissionERDF – DG Regio

Managing AuthorityManaging Authority

EU

Leve

lNa

tiona

l /or

re

gion

al L

evel

Holding Fund (« HF »)Holding Fund (« HF »)

Financial intermediaries

Financial intermediaries

Natio

nal/r

egio

nal

/Loc

al L

evel

Regi

onal

/Loc

al

Leve

l

SMEs Microfinancebeneficiaries

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 Programming Authority €

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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

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Main Agenda

• European Investment Fund at a glance

• Why JEREMIE?

• The JEREMIE System and Products

• Key elements of Choice

• Current Status & Next Steps

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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) 42 66 88 212Fax: (00 352) 42 66 88 280

jeremie@eif.orgwww.eif.org