“Recent policy approaches to SME finance”

“Recent policy approaches
to SME finance”
Dr. Helmut Kraemer-Eis
Head of Research & Market Analysis
European Investment Fund
07 July 2014 – Rome
The European Investment Fund (EIF) at a glance
1994
2000
AAA-rated
Shareholders
founded and
started providing
venture capital to
European
businesses in 1997
Majority owned by
the European
Investment Bank
(EIB) with which we
form the EIB Group
We’re AAA-rated by
all major rating
agencies, with a
strong capital base
62.1% EIB, 30%
EC,
25 public and
private financial
institutions
holding the
remaining 7.9%
Access to Finance
Helping SMEs,
micro- enterprises
and European
regions innovate
and grow by making
finance more
accessible
Dual objective
Wide range of
resources
Working
pursuing EU
policy objectives
as well as financial
sustainability
EIB, own res.,
European Comm.,
Member States /
Regions, private
investors, public
institutions, etc.
with financial
intermediaries
across the 28 EU
countries, EFTA
and all Accession
countries
2
Let’s recall - the backbone of the EU economy
Source: Kraemer-Eis, Lang, Gvetadze (2014), based on data from Eurostat
3
“THE” SME?: different needs in different stages
Public Stock Markets
SME lending,
Portfolio Guarantees & Credit Enhancement
Formal VC Funds & Mezzanine Funds
VC Seed & Early Stage
Microcredit
Business Angels,
Technology Transfer
PRE-SEED PHASE
SEED PHASE
START-UP PHASE
EMERGING GROWTH
DEVELOPMENT
SME Development Stages
HIGHER RISK
LOWER RISK
4
Microfinance: Heterogeneous market environment
People at risk of poverty or social exclusion
Share of enterprises reporting access to finance as
their most pressing problem
Source: Kraemer-Eis, Lang, Gvetadze
(2014), based on data from Eurostat
(top) and ECB (right)
5
VC – Market activity
Funds raised by VC firms located in Europe
9
Share of government agencies in VC fundraising
8.3
8
7
6.3
5.2
3.7
Family offices & Private Individuals
35%
Corporate investors
30%
Insurance companies
25%
5
4
Government agencies
40%
3.9
4.0
Banks
20%
Pension funds
15%
3.2
3
10%
2
5%
Fund of funds & Other asset
managers
Academic Inst. / Endowments /
Foundations
Capital markets
0%
1
2007
0
2007
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
2013
10
2013
Venture Capital investment activity evolution in Europe
Sovereign wealth funds
New funds raised
(excluding capital gains)
8
bn EUR
bn EUR
6
45%
6
Classified
4
Unclassified
2
bn EUR
Later stage venture
7
6.3
6
0.20
5
2.49
0
Total venture
2007
2008
2009
2010
2011
2012
2013
0.29
2.56
4.2
0.15
3
2.08
3.59
Seed
6.6
4
2
Start-up
3.9
4.0
0.14
0.17
1.99
2.00
3.39
3.41
0.12
0.12
1.87
1.84
1.40
1.46
2012
2013
Source: Kraemer-Eis, Lang,
Gvetadze (2014), based on
data from EVCA
3.76
1
1.93
1.79
1.78
2009
2010
2011
0
2007
2008
6
Outstanding loans & interest rate statistics
Evolution of monetary financial
institutions interest rates on
new loans to non-financial corporations
Source: ECB data
Source: Kraemer-Eis,
Lang, Gvetadze (2014),
based on data from ECB
No information on SME
loans available, but
approximation possible!
7
SME Securitisation
European outstanding securitisation transactions
(by collateral, bn EUR)
SMESec transaction volumes in Europe and
share of SMESec in total securitisation
Source: Kraemer-Eis, Lang, Gvetadze (2014),
based on data from AFME
8
Looking forward: EIB Group support for SMEs
 Support to SMEs is EIF’s & EIB Group core business!
 Implementation of capital increase & EREM
 Continue to address specific market-gaps in SME finance, using a toolbox of
instruments and working with a wide range of banking partners and nonbanking financial intermediaries.
 Crowding-in of private resources is key!
 Continue strengthening cooperation with the European Commission, Member
States, international organisations, national and multilateral development
financing institutions, and also SME and banking associations.
 Support the European Commission in designing the new financial instruments
for the Multi-Annual Framework (Cosme / Horizon 2020 / Structural Funds).
9
Thank you for your attention!
Dr. Helmut Kraemer-Eis
[email protected]
Further information can be found here:
http://www.eif.org/news_centre/research/index.htm
10
Annex 1: EIF’s recent activities / new instruments
for SME finance (examples)
2013: a record volume of EUR 1.5bn equity commitments was achieved creating market traction and
leveraging EUR 7.1bn
2013: EUR 1.8bn of guarantees were committed to financial intermediaries stimulating new loan
portfolios and mobilising additional resources, leveraging EUR 8.6bn
New European initiatives – debt financing (guarantees):
• RSI - Risk-Sharing Instrument for innovative and research oriented SMEs/small MidCaps
• New securitisation approaches, e.g. SME Covered Bonds
New European initiatives – equity (Venture Capital):
• EAF - European Angels Fund
• SIA - Social Impact Accelerator
National initiatives:
• DVI - Dutch Venture Initiative
• CYPEF - Cyprus Entrepreneurship Fund
• Polish Growth Fund of Fund
• MDD - Mezzanine Dachfonds für Deutschland
Multi country initiatives:
• BIF - Baltic Investment Fund
• WB EDIF - Western Balkans Enterprise Development & Innovation Facility
11
Annex 2:
The shape of EIF in 2014 and beyond
“
Committing and mobilising resources
to support 100 000 SMEs a year
Resources
EC COSME / Horizon
2020 Equity
Products
Full range of equity
spectrum
EIB Risk Capital
Resources
Structural Funds
Guarantees
Risk sharing
EIB Risk Enhancement
Mandate (EREM)
Erasmus, Innovation
Social Enterprise
ABS
EC COSME/Horizon
2020 Guarantees
& Securitisation
SME initiative
Youth employment
Microfinance
Partners
Funds-of-funds
Co-investment facilities
with national public
bodies
Public co-investors /
promotional
institutions
National & Regional
Hold. Funds (Struc.Funds)
”
Intermediaries
Funds
Other
market
players
Target groups
Innovative
SMEs
SMEs
Banks
Mid-Caps
Public co-investors /
promotional institutions
Guarantee institutions
Other FIs
MFIs
Microenterprises
12
Annex 3 :
New EIB Group Risk Enhancement Mandate
(figures in the graph below are indicative)

Scale up instruments for Access to Finance for SMEs

Help mitigate the effects of deleveraging and tighter regulation of European Banks (RiskSharing and Capital Relief)

Complements the European Council call + ECB Support for Securitization

Enhance EIF risk taking capacity for mezzanine tranches (possibly complemented by EIB
investment in senior tranches)
13
Annex 4: Enhanced cooperation with the EC
“
EIB Group is committed to continue
implementing EU initiatives
”
Central EU instruments
Research,
Development
Innovation
Jobs,
Growth
and
Social
Cohesion
Horizon 2020
Equity Facility for R&I
SME and Small Mid
Caps Guarantee Facility
for RI (RSI successor)
Creative Europe
Cultural and Creative
Sector Guarantee Facility
Competitiveness &
SME (COSME)
Progress Microfinance II
Social enterprise investing
Structural/Cohesion Funds
New SME Initiative
Instruments under
Structural and Cohesion
Funds
Pooling of resources
from European
Structural and
Investment Funds (ESIF),
COSME and Horizon
2020, EIB/EIF and
national promotional
banks
Equity Facility for Growth
(Loan Guarantee Facility
Social Change
& Innovation
Joint instrument
Erasmus for all
Student Loan Guarantee
Facility
Guarantees of new
loans to SMEs,
securitisation of existing
SME loans
EU level instrument
(contribution of Member
State funds from
Operational Programmes to
centrally managed EU
programs)
Off-the shelf instruments
Tailor-made instruments
14
Source: EC, adapted