Presentation on theme: "Knowledge Economy Forum IX, May 5, 2010 Roland Siller"— Presentation transcript:
1 Exporting a proven model: Innovation Financing A presentation by KfW Development Bank Knowledge Economy Forum IX, May 5, 2010Roland SillerFirst Vice PresidentEurope and CaucasusKfW Development Bank
2 60 Years of KfW Financing with a Public Mission Promotional bank of the Federal Republic of GermanyFounded in 1948 as public law institution Kreditanstalt für Wiederaufbau (KfW)Shareholders: 80% Federal Republic, 20% federal statesHeadquarters: Frankfurt am Main Branches: Berlin and BonnBalance sheet (2009): EUR 400 billionRepresentative offices: about 60 offices and representations worldwideNo of employees: 4,265Best rating: AAA/Aaa/AAABalance sheet total vs promotional banks EUR in billions (2008)Balance sheet total vs commercial banks EUR in billions (2008)
3 A Bank with a Wide Array of Roles and Functions Domestic promotional businessPromotion ofSMEs, entrepreneurs, environmental andclimate protectionbusiness start-upsPromotion ofhousing, education, infrastructure and social developmentFinancing of municipal infrastructure projects and promotion in EuropeInternationalproject andexport financePromotion ofdeveloping andtransition countriesInnovation Finance as an integral part of KfW Mittelstandsbank333
4 Approach and Volume of Innovation Financing in Germany Role of KfW Mittelstandsbank 1) ConceptKfWApplicationCommercial bank, venture capitalor private equity companyApplicationEntrepreneurFinancing agreementRefinancing, equity2) InstrumentsFinancing of InnovationsPromotionof Start-upsPromotion ofemerging,growing andestablished companiesSenior Loan ProgrammesSubordinated Loan Programmes (Mezzanine)Venture Capital Programmes (Equity)Here we you can see an overview on all our programs, which we run under the roof of the KfW-Mittelstandsbank.As mentioned before: we use three basic funding instruments: loans, mezzanine and equity.Where as loans and mezzanine capital is on-lend via banks, the Equity capital programs are distributed in cooperation with VC or PE-companies.In nearly all of our programs we use the risk-adusted pricing mechanism (Creditworthiness / Collateral).In some programs we assume a part of the credit risk:3) Volumes
5 Adaptation of KfW Innovation Finance Programmes to the Russian Federation Status quo in the Russian Federation:Innovation definition focuses on hi-tech and global innovation conceptsExisting promotion programmes follow that approach (hardly bankable), no SME focusAims of corporation between Vnesheconombank and KfW Development Bank:Fostering innovation on SME levelStrengthening the Russian banking sector in terms of know-how and programmesImplementing a 100 mln EUR programme for Russian banks to be onlent to SMEApproach of KfW Development Bank:Adaptation of existing programmes to Russia; utilization of experiences in GermanySupport in the development and anchorage of a broader innovation definition including innovative modernisation (high demand potential in Russia; bankable products possible)Establishment of cooperation with development institutions like Vnesheconombank and RosBROn-lending via eligible partner banks for risk sharing and faster market penetration (KfW-Model)Focus on SME as a sector with the most promissing growth potentialStep by step approach: loan based programme followed by equity and mezzanine programmes!! Sustainable success of the programme more important than quick wins !!
6 Overview: Financial and Private Sector Development Europe&Caucasus Activities and Portfolio Financing / Refinancing of SME and Microbanks in the regionsGreenfielding of 13 banksEstablishment of best practice structured finance projects such like the EFSE(European Fund for South East Europe; biggest microfinance fund worldwide: >700 mln EUR in assets;<600 mln EUR loan portfolio);clients, loans disbursed - benchmark for public-private partnership projectsInstrumentsSenior loansSubordinated loansEquity participationsRisk participations, guaranteesTechnical assistanceCountriesSoutheast Europe: Serbia, Montenegro, Kosovo, Bosnia & Herzegovina, AlbaniaEU Accession Countries: Croatia, Macedonia, Turkey, Bulgaria (EU), Romania (EU)Eastern Europe: Russia, Ukraine, MoldovaCaucasus: Georgia, Armenia, AzerbaidschanPortfolio5 billion EUR (as of April 2010)of which 2,4 billion EUR are channelled through the financial sector (mainly for SME promotion purposes)
8 Leverage of funds: EFSE pursues a Tiered Funding Strategy EFSE – Innovative Structure Adaptation of Fund Structure for advanced Innovation Finance (Mezzanine, Equity)Leverage of funds: EFSE pursues a Tiered Funding StrategyDec Dec 09 Target 2011Fund Volume in EUR millionDonor FundsInternational Finance InstitutionsPrivate InvestorsA-Sharesand NotesB-SharesC-Shares