1 JEREMIE : an innovative instrument to support SMEs Jozef Stahl DG Regional Policy - Unit D3 Financial Engineering OPEN DAYS 2010 – Workshop on JASPERS, JEREMIE, JESSICA - progress and future perspectives, 5th October 2010

2 JEREMIE = Joint European Resources for Micro to medium Enterprises Joint initiative of the Commission and the EIF/ the EIB Group Objective: provision of debt, equity and/or guarantees to finance SMEs expansion or new business creation –special focus on start ups, new technologies, innovation, technology transfer to SMEs Commission partners: Member States, EIF, EIB, other financial institutions

3 Innovative elements JEREMIE as financial engineering instrument has two main innovative features: –Repayable instruments instead of once-off payment of grants –Introduction of Holding Fund – optional – to organise operations on behalf of managing authorities – flexibility, expertise, leverage, …

4 Key advantages of Fin. Eng. Sustainability by recycling funds over long-term Leverage effect by attracting other sources of finance, including private funds + by structuring instruments Stronger incentives towards better performance and efficiency New sources of expertise and know-how Development and/or modernisation of financial markets (new products, new players)

5 JEREMIE Flow Chart Operational Programme SMEs Financial Intermediaries Financial Intermediaries Holding Fund Holding Fund

6 Holding Fund – main advantages Investment flexibility: possibility of adapting investment strategy to market needs/ market developments Expertise and know-how of a professional institution Transfer of significant part of administrative tasks from managing authorities to HF Financial leverage at the level of HF Incentives in regulations

7 Holding Fund – principal tasks Development of investment strategy and product mix Organisation of calls for financial intermediaries Selection of financial intermediaries: –Evaluation of offers, due diligence, negotiations of agreements Monitoring, controlling and reporting to managing authorities Financial management, accounting, etc.

8 Financial products for SMEs Start-upEarly stageExpansion stage EquityVenture capital DebtLoans Micro-credit Guarantees Hybrid instruments Participative loansMezzanine instruments Other instruments Technology transfer, Incubators, Pre-seed Private investors/ Business angels

9 Implementation phases Phase 1 – Evaluation and programming Phase 2 – Selection of HF (optional) Phase 3 – Selection of financial intermediaries Phase 4 – Provision of funding to SMEs

10 Evaluation phase JEREMIE evaluation studies ( ): –Scope: analysis of demand and supply of financial products for SMEs (gap analysis) + recommendations on next steps –Offered for free to Member States and regions interested in the implementation of JEREMIE –Co-financed 85% by the Commission and 15% by the EIF –55 reports completed

11 15 MS- evaluations at national level only 2 MS - evaluations at regional level only 4 MS - evaluations at national and regional level 21 MS covered by evaluation studies BulgariaN CyprusN Czech RepublicN DenmarkN EstoniaN France R (13) Germany R(1) GreeceN HungaryN ItalyNR(2) LatviaN LithuaniaN MaltaN PolandNR(6) PortugalN RomaniaN SlovakiaN SloveniaN SpainNR(10) SwedenN United KingdomNR(4) JEREMIE evaluation studies Legend: N: National evaluations R: Regional evaluations 0: No evaluation requested (…): number of reports Austria0 Belgium0 Finland0 Ireland0 Luxemburg0 Netherlands0

12 JEREMIE Holding Funds EIF as JEREMIE HFOther institutions as JHF Greece Romania Latvia Lithuania (*) Languedoc-Roussillon (FR) Campania (IT) Slovakia (EIF with SZRB) Cyprus Bulgaria Sicily (IT) Malta Hungary Lithuania (*) Lombardia (IT) UK: Wales +EIB loan, North East England +EIB loan, Yorkshire&Humberside +EIB loan Spain: national, Andalusia, Cataluña Poland: national, 5 regional and one multi-regional Auvergne (FR) Slovenia: national

13 Perspectives JEREMIE HF agreements signed so far provide for a total amount of some 3.1 billion. EIF is managing around one third of this amount (11 HF mandates) and other financial institutions are managing two thirds (17-18 HF mandates). Financial engineering instruments for SMEs (without HFs) in other regions: e.g. Scotland (UK); Toscania, Emilia Romagna, Lazio, Veneto, Molise, Sardinia, Piemonte (IT).

14 JEREMIE Networking Platform Launched by the Commission/ DG REGIO in co-operation with the EIF Role: a tool to foster the implementation of JEREMIE in MS and regions Objectives: –Exchanging know-how and experience about JEREMIE –Increasing knowledge of financial engineering instruments in the field of SME financing –Developing proposals for now and future

15 For further information: Websites: DG REGIO – Unit D3 – Financial Engineering