1 CIP Financial Instruments Leverage Effects European Commission Economic and Financial Affairs DG - Luxembourg, Unit L2 James Mc GING Head of Unit, ECFIN-L2 Presentation on the occasion of the EIP Management Committee meeting, Brussels, 26 June 2008

2 Management Mandate Resources Investment SPECIALISED FUND Other Investors Investments How does GIF work? SME Other Investors

3 CIP financial instruments - RISK CAPITAL (GIF) principles PRE-SEED & EARLY STAGE (GIF1)  SMEs < 10 years  Focus on high growth potential  Support co-investment with business angels  Typically up to 25% EU investment  (adjusted for non-eligible beneficiaries) EXPANSION STAGE (GIF2)  Lower EU intervention  More sizeable VC funds  Typically up to 15% EU investment  ( adjusted for non-eligible beneficiaries)

4 Venture Capital Instruments Achievements – Leverage Effects Fund level – total MAP € 5,65 of total funds for € 1 of EU funds committed

5 Venture Capital Instruments Achievements – Leverage Effects SME level – Skype Example EU Investment: EUR 10 M EU Share: 19,5% EU Leverage (fund level): 1:5 Fund Investment: EUR 1,4 M EU Investment: EUR 0,3 M Fund Share: 5,5% EU Share: 1,1% EU Leverage (SME level): 1:92 Other investors

6 HowDoesSMEGwork Financial Intermediary Direct lender SME Management Mandate Financial Intermediary Guarantee Institution Direct lender EU Guarantee EU Counter- Guarantee Guarantee Debt financing

7 CIP Financial Instruments leverage effects Case study: direct guarantee operations Case of a bank mio FI Loan Portfolio (non EU)50,0 FI Losses (5%)2,5 Loan Portfolio (with EU)100,00 Total Losses (6%)6,0 Leverage total 100:333,3 Leverage on additional vol. 50:316,6 EU Guarantee Cap3,0 FI’s Losses (half)3,0

8 CIP Financial Instruments leverage effects Example: Loan portfolio after EU intervention Case of a bank

9 CIP Financial Instruments leverage effects Case study: direct guarantee operations Guarantee organisation case Banks alone With Guarantee organisation With EU assistance to Guarantee organisation Loan amounts Additional Volume Total losses (6%) 3612 Cap amount committed 3 Share of losses before Eu intervention 330 Share of losses after Eu intervention 633 leverage on additional vol. 33,33 leverage total 66,67

10 CIP Financial Instruments leverage effects Example: Loan portfolio after EU intervention Case of a guarantee organisation

11 Additional loan volume leveraged: EUR 13 billion As of 30 September Data based on figure provided by the European Investment Fund (EIF) Achievements of ancestor programme MAP - leverage effects Enhanced access to finance for SMEs: “Additionality” of SMEs Guarantees under MAP Approved Cap amounts Total aggregate loan amount € 262 mio€ 17,495 mio Nr of Portfolios of Financial Intermediaries 52 Nr of guaranteed loans 261,408 SMEs Guarantees under MAP

12 Status: 15 May 2008 CIP Financial Instruments Projects approved/in the pipeline GIFSMEG Approved Financial intermediaries 105 Countries covered 144 Pipeline Financial intermediaries 1023 Additional countries covered 323 Very strong pipeline:

13 CIP PARTICIPATING COUNTRIES APPLICATIONS RECEIVED (March ’08) BelgiumFonds de Participation SOWALFIN Waarborgbeheer (PMV) Fonds Bruxellois BulgariaEncouragement Bank FinlandFinnvera FranceSOCAMA Oseo Garantie ADIE SIAGI Germany KfW GreeceTEMPME HungaryHitelgarancia UniCredit Bank IrelandFirst Step ItalyATI ALL GAR ACL–ACER MCC LithuaniaINVEGA SloveniaSlovene Enterprise Fund Spain CERSA MicroBank SwedenNorrlandsfonden UKThe Prince’s Trust