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Knowledge Economy Forum IX, May 5, 2010 Roland Siller

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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, 2010 Roland Siller First Vice President Europe and Caucasus KfW Development Bank

2 60 Years of KfW Financing with a Public Mission
Promotional bank of the Federal Republic of Germany Founded in 1948 as public law institution Kreditanstalt für Wiederaufbau (KfW) Shareholders: 80% Federal Republic, 20% federal states Headquarters: Frankfurt am Main Branches: Berlin and Bonn Balance sheet (2009): EUR 400 billion Representative offices: about 60 offices and representations worldwide No of employees: 4,265 Best rating: AAA/Aaa/AAA Balance 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 business Promotion of SMEs, entrepreneurs, environmental and climate protection business start-ups Promotion of housing, education, infrastructure and social development Financing of municipal infrastructure projects and promotion in Europe International project and export finance Promotion of developing and transition countries Innovation Finance as an integral part of KfW Mittelstandsbank 3 3 3

4 Approach and Volume of Innovation Financing in Germany Role of KfW Mittelstandsbank
1) Concept KfW Application Commercial bank, venture capital or private equity company Application Entrepreneur Financing agreement Refinancing, equity 2) Instruments Financing of Innovations Promotion of Start-ups Promotion of emerging, growing and established companies Senior Loan Programmes Subordinated 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 concepts Existing promotion programmes follow that approach (hardly bankable), no SME focus Aims of corporation between Vnesheconombank and KfW Development Bank: Fostering innovation on SME level Strengthening the Russian banking sector in terms of know-how and programmes Implementing a 100 mln EUR programme for Russian banks to be onlent to SME Approach of KfW Development Bank: Adaptation of existing programmes to Russia; utilization of experiences in Germany Support 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 RosBR On-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 potential Step 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 regions Greenfielding of 13 banks Establishment 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 projects Instruments Senior loans Subordinated loans Equity participations Risk participations, guarantees Technical assistance Countries Southeast Europe: Serbia, Montenegro, Kosovo, Bosnia & Herzegovina, Albania EU Accession Countries: Croatia, Macedonia, Turkey, Bulgaria (EU), Romania (EU) Eastern Europe: Russia, Ukraine, Moldova Caucasus: Georgia, Armenia, Azerbaidschan Portfolio 5 billion EUR (as of April 2010) of which 2,4 billion EUR are channelled through the financial sector (mainly for SME promotion purposes)

7 Thank you very much for your attention !

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 Strategy Dec Dec 09 Target 2011 Fund Volume in EUR million Donor Funds International Finance Institutions Private Investors A-Shares and Notes B-Shares C-Shares

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