Gunnar B. Mai CIP Workshop

This presentation was prepared by EIF. The information included in this presentation is based on figures available for January 2010 Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.

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Table of Contents

Some Information about EIF The CIP Programme The venture capital instruments under CIP The guarantee instruments under CIP

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The Challenge: Financing Innovation amongst SMEs in Europe

Importance of SMEs as the Foundation Stone for Tomorrow’s Prosperity

Source: Eurostat, Commission Communication on Modern SME policy for Growth and Employment

SMEs account for a large proportion of Europe’s economic activity

Micro-businesses dominate employment in countries such as Italy (48%) and Greece (57%)

Successive EU summits put issues of growth, employment, innovation and competitiveness high on agenda

Support to SMEs: one of the top six EIB Group priorities

EIF is the SME arm of the EIB Group

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EIF at a Glance

Dual Objective of Meeting EU Policy Goals & Generating a Satisfactory Return on Equity

EU specialised institution for SMEs, risk financingVenture Capital and 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 /IntermediariesEU 27, EFTA, Candidate CountriesDistributing through Banks and Funds

AAA ratedStaffing, Culture and ValuesLeading-edge modern institutionAdapting to changing market conditionsAttracting talented staffHigh standards of compliance and integrity

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EIF’s Shareholders*

EIB: Main Shareholder (61%) European Investment Bank’s shareholders: 27 EU

Member States Subscribed capital: €165 bn Total lending : € 350 bn 2009 new lending € 79 bn , an increase of 37%

European Community represented by the European Commission (29%)

30 public and private financial institutions from 17 countries (9%)

* 1% of EIF’s shares are still to be issued

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Under EIF Management at 30/06/2009

9 300550

7 300450

10 5001 500

23 8003 400

33 1003 950

22 0002 650

4 200700

N/AN/A

€m

Capacity - Guarantees

30/06/2009(outstanding)EU

Leveraged PortfolioBudgetary Resources

Next 4 Years (new

commitments)

EIF Own Resources Estimated Leveraged PortfolioEIF ExposureJEREMIELeveraged PortfolioBudgetary Resources

TOT Leveraged PortfolioBudgetary Resources/Exposure

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Under EIF Management at 30/06/2009

EULeveraged PortfolioNet Commitment*

JEREMIELeveraged PortfolioNet Commitment

EIB/EIF VC& Mezzanine Leveraged PortfolioNet Commitment*

2 400400

2 400400

1 500 300

9 0001 800

20 7003 100

TOTAL Portfolio of Funds Net Commitment

23 1003 500

12 9002 500

N/AN/A

€m

Capacity – Venture Capital

30/06/2009(outstanding)

Next 4 Years (new

commitments)

* Does not include fund of funds and ERP initiatives

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Table of Contents

Some Information about EIF The CIP Programme The venture capital instruments under CIP The guarantee instruments under CIP

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Competitiveness & Innovation Framework Programme (CIP)

CIP financial instruments managed by EIF on behalf of the EC

Purposes Encourage the competitiveness of European

enterprises Support innovation and entrepreneurship activities Provide better access to finance Promote the increased use of renewable energies

and energy efficiency Products

Guarantees: SME Guarantee Facility Venture capital: High Growth and Innovative SME

Facility

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Table of Contents

Some Information about EIF The CIP Programme The venture capital instruments under

CIP The guarantee instruments under CIP

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■ Two windows■ GIF 1: Seed & Start-Up Stage■ GIF 2: Expansion Stage

■ Targeting >50% innovative SMEs■ Eco-innovation & Business Angel aspects■ Strong demand to date

CIP GIF Venture Capital Facility

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GIF signed commitments:More than EUR185m in 17 funds

Signed Commitments Geo mEURGIF1 360 Capital One France/Italy 14.8

Bullnet Capital Fund II Spain 2.7Capricorn Cleantech Fund Multi-country 15.0Chalmers Innovation Fund Sweden 2.9Conor Technology Fund II Finland 10.0Dritte SHS Technologiefonds Germany 7.6Fountain Healthcare Partners I Ireland 15.0Inventure Fund Finland 10.0Pentech Fund II UK/Ireland 5.0Serena Capital France 12.5WHEB Ventures II Multi-country 14.5UMIP-MTI TTA Fund UK 11.5Total 121.5

GIF2 Albuquerque FCR Portugal 13.2Baltcap Private Equity Fund Estonia 10.0Cape Regione Siciliana Italy 6.4Demeter II Multi-country 20.0Pinova Fund Multi-country 15.0Total 64.5

Total 186.0

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Inventure Fund Ky (ex Holtron)Bullnet Fund IICape Regione SicilianaDritte SHS Technologie GmbH & Co. KGDemeter IIPinova Fund IFountain Healthcare Partners Fund IAlbuquerque FCRChalmers Innovation FundPentech Fund IIUMIP-MTI TTA Fund360 Capital OneBaltcap Private Equity FundCapricorn Cleantech FundSerena CapitalWHEB Ventures Private Equity Fund IIConor Technology Fund II

Competitiveness & Innovation Framework Programme (CIP)

Countries covered by CIP i.e. GIF agreements signedCountries eligible for CIP where no GIF agreement has been signed to date

Other Countries

COUNTRIES COVERED BY CIP GIF

17 AGREEMENTS SIGNED for over EUR 185m

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GIF sector focus:17 funds, total fund sizes EUR1,18bn

ICT24%

Technology Generalist8%

Cleantech37% Generalist

21%

Lifescience10%

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How to Apply

All information is published on EIF’s website

No formal application Fundraising teams send documentation to EIF Initial screening => second screening => due

diligence Proposal to EIF Board and the EC for approval

Timing: case by case basis. Typically 12 to 18 months

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Table of Contents

Some Information about EIF The CIP Programme The venture capital instruments under CIP The guarantee instruments under CIP

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■ Free of charge capped guarantees provided for additional risk-taking by intermediaries (guarantee schemes, banks, leasing companies…) resulting in Enhanced Access to Finance for SMEs

■ Enables lenders in the current economic environment to further support SMEs (tighter lending criteria to be relaxed)

■ Guarantees for investment loans and working capital■ Selection of intermediaries with wide geographical cover in each

country so that as many SMEs as possible have access■ Minimum selection criteria (commitment to SME financing,

financing volumes, geographical reach etc.)■ Visibility and promotion of EC support

CIP SME Guarantee Facility

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Four business lines, known as "windows“■ Loan Guarantee Coverage of portfolios of mid- to long-term

debt finance targeting SMEs and focused on investment financing. Flagship window thanks to its flexibility and wide-ranging characteristics

■ Micro-Credit Guarantee Coverage of portfolios of micro-credits to encourage financial institutions to provide financing to microenterprises, especially start-ups

■ Equity Guarantee Coverage of portfolios of equity and mezzanine investments in SMEs in the seed and start-up phases. Aim to help SMEs improve their financial structure

■ Securitisation Guarantees to support securitisation transactions so that financial institutions may mobilise additional debt financing for SMEs

CIP SME Guarantee Facility Instruments

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Competitiveness & Innovation Framework Programme (CIP) SME Guarantees

Countries covered by CIP i.e. agreements signedCountries eligible for CIP Guarantees where no agreement has been signed to date

Other Countries

COUNTRIES COVERED BY CIP GUARANTEES

AGREEMENTS SIGNED 22 F.I. to date for over € 3.5bn (EUR 195 m of

budget)Austria: Austria WirtschaftsserviceBelgium: FdPBulgaria: BDB, Raiffeisenbank BulgariaFrance: SOCAMA, ADIE, Siagi, Crédit CoopératifGermany: KfWHungary: UniCredit BankIreland: First Step MicrofinanceItaly: Alleanza di Garanzia, ATI ITALIA PMI, Federfidi Lombarda, ATI Fidi. Gar.Latvia: Hipoteku BankaNorway: Cultura SparebankPoland: BPHSlovenia: Slovene Enterprise FundSpain: CERSA, MicroBank La CaixaTurkey: KGF

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General Features (I)

Free of charge guarantee Enhanced Access to finance Requirement that the

Guarantee Facility covers risk that is additional to the one already taken by the intermediary

increases in lending volumes, loan maturities, rate of financing covered

waiver of collateral requirements riskier target groups (start-ups, new areas of operation)

the requirement is translated into specific and quantified obligations: target volumes

Guarantee conditional on achieving specific volumes

Special focus on eco-innovation, business transfers, etc. Capped guarantees at a pre-agreed level taking into

account expected default and recovery rates, risk premium charged by the intermediary, requirements as to Enhanced Access to Finance

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General Features (II)

Visibility SMEs have to be informed of the EC support

Promotion, Marketing link to a dedicated CIP website success stories of supported SMEs

State Aid rules are applicable to EU Guarantees (e.g. de minimis), except for the Securitisation Window (where guarantee fees are charged)

Quarterly and annual reporting requirements and monitoring

Commitment fee in case target volumes are not reached, applicable to all windows except Micro Credit Window

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Window 1: Loan Guarantee

■ Purposes of financing: investment in tangible, intangible assets,

business transfers, working capital (loans, leasing)

■ Minimum maturity: priority to minimum 18 months

■ Borrowers: SMEs according to EU definition (less than 250 employees)

■ Guarantee Rate: up to 50%■ Ranking: pari passu■ Guarantee maturity: final maturity of up to

10 years■ Guarantee Cap Rate: maximum 10%, based

on expected loss■ Free of charge guarantee

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Window 1: Loan Guarantee - some examples (I) Successful implementation by banks

Germany start-up loan (up to EUR 50,000) offered via the banking system at standardised conditions combined with a 80% risk coverage

Bulgaria SME secured loan product with reduced collateral requirements, increased maturities and reduced cost of financing

Poland relaxed lending criteria for two existing loan products and launch of a new loan product in times of restrictive lending policies

Latvia new development loan product dedicated to start-ups and young, small companies

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Window 1: Loan Guarantee - some examples (II) Successful implementation by guarantee schemes

Italy increased guarantee rates and guaranteed maximum loan volumes as well as additional industry sectors

Spain increased counter-guarantee rates and strengthened focus on providing coverage to long-term SME loans

France increased volumes of guarantees for small equipment loans and business transfer loans, granted with substantially reduced collateral requirements

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■ Purposes of financing: investments, working capital

■ Minimum maturity: priority to minimum12 months at least 6 months

■ Maximum amount: EUR 25,000■ Borrowers: micro enterprises

according to EU definition (less than 10 employees)

■ Guarantee Rate: up to 75%■ Guarantee maturity: final maturity of up to 5

years■ Guarantee Cap Rate: maximum 20% based

on expected loss■ Technical support: EUR 200 per borrower

financed (up to maximum EUR 50,000)

■ Free of charge guarantee

Window 2: Micro-Credit Guarantee

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Window 2: Micro-Credit GuaranteeSuccessful implementation by banks and MFIs

Spain substantially increased lending volumes to micro enterprises

Norway substantially increased micro-lending volumes that would otherwise be constrained due to the small size of the lender

Ireland substantially increased lending volumes and higher risks accepted

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■ Purpose of financing: mezzanine finance, quasi equity or equity

■ Maximum amount: EUR 500,000 (equity)■ Borrowers: SMEs according to EU

definition, in seed or start-up phase, or operating for less than 10 years

■ Guarantee Rate: up to 50%■ Guarantee maturity: final maturity of up to

10 years■ Guarantee Cap Rate: maximum 20%, based

on expected loss■ Free of charge guarantee

Window 3: Equity/Quasi-Equity Guarantee

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■ New under the SME Guarantee Facility■ Securitisation of SME loan portfolios:

■ cover for mezzanine and junior tranches■ co-investment with EIF own resources may be

considered■ focus on smaller banks, new markets, multi-

country and multi originator transactions■ support to cover some costs under discussion■ Cash / synthetic transactions

■ Guarantee rate: up to 100% of guaranteed tranche, max 50% for First Loss Piece

■ Term: up to 10 years■ Guarantee fees will be charged■ Enhanced access to finance: Undertaking to use

resources to provide new loans to SMEs according to EU definition

■ EU Requirements apply to the newly created (additional) portfolio (reporting, visibility, audit rights etc)

Window 4: Securitisation

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How to apply and application process All information is published on EIF’s website:

www.eif.orgProduct description and policy, selection criteria, information requirements

Application process: Applications in line with the requirements can be

pre-selected Requirement of further information if necessary Due diligence meeting Proposal to EIF Board and the EC for approval Agreement implementation

Timing: between 3- 6 months (depending on the quality of information provided)

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Contact details

CIP coordinator:Gunnar MAIg.mai@eif.org +352 426688 358

European Investment Fund96, boulevard Konrad AdenauerL-2968 Luxembourgcip.guarantees@eif.org