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First InnovFin guarantee agreement in Estonia to finance innovative companies

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    Date: 18 February 2015
The European Investment Fund (EIF) and LHV Pank have signed an agreement to increase lending to innovative small and medium-sized enterprises (SMEs) as well as Small Mid-caps under InnovFin – EU finance for innovators, an initiative supported by the European Commission.

The new agreement allows LHV Pank to provide finance to innovative companies in Estonia for a total of EUR 40m over the next 2 years with the support of a guarantee provided by the EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation. This is the first InnovFin SME guarantee signature in Estonia and the fifth in Europe, enabling LHV Pank to offer innovative companies additional financing at favourable conditions.

European Commissioner for Research, Science and Innovation Carlos Moedas said: “Estonia has been a digital economy leader and a hub for innovative companies, especially in the ICT-sector. By helping to ensure such credit for innovative companies, the EU opens doors for Estonia's boldest and most creative minds, giving a boost to the Estonian and European economy.”

Commenting on the signature, Head of Portfolio Guarantees, Vincent Van Steensel said: “I am pleased to be signing our first Estonian InnovFin SME Guarantee agreement with LHV Pank for the benefit of businesses in Estonia. I am convinced that this new agreement will help the EIF via LHV Pank to reach new markets and support innovative companies in Estonia”.

Head of Corporate Banking at LHV Pank, Indrek Nuume said: “InnovFin SME Guarantee allows greater access to loan capital for small and medium-sized enterprises. For our bank it creates an opportunity to finance companies which have proven their business model, but lack in strong collateral to involve additional funding. The resource provided by LHV Pank and European Investment Fund is meant for fast growing enterprises (with yearly turnover growth over 20%) and companies that invest in innovation developing their products or services. The EIF guarantee covers 50% of loan volume and the fee for the guarantee amounts to 0,5%. At the moment we are the first credit institution from the newer EU member states that has signed an agreement with EIF to be an intermediary for InnovFin SME Guarantee”.

The aim of the InnovFin SME Guarantee is to encourage banks or other financial institutions to lend to SMEs and small mid-caps (firms with fewer than 500 employees) in need of investment and/or operating capital to finance research, development and innovation activities, with EU financial support. Financial institutions are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe.

About InnovFin SME Guarantee

InnovFin SME Guarantee provides guarantees and counter-guarantees on debt financing of between €25,000 and €7.5 million, in order to improve access to loan finance for innovative small and medium-sized enterprises and small midcaps (up to 499 employees). The InnovFin SME Guarantee is implemented by the European Investment Fund, and will be rolled out through financial intermediaries (banks and other financial institutions) in EU Member States and Associated Countries. Under the InnovFin SME Guarantee, financial intermediaries will be guaranteed by the EIF against a proportion of their losses incurred on the debt financing. InnovFin SME Guarantee is part of InnovFin - EU Finance for Innovators, a new range of EIB Group (including EIF and EIB) products to facilitate access to finance for innovative businesses. This transaction is supported with the financial backing of the European Union under Horizon 2020 Financial Instruments.

About the EIF

The European Investment Fund's (EIF) central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance.  EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 7.9bn at end 2013. With investments in over 435 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 5.6bn in over 300 operations at end 2013, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

About LHV Pank

LHV Group is the largest domestic financial group and capital provider in Estonia. AS LHV Group’s key subsidiaries are LHV Pank and LHV Asset Management. LHV has a representative office in Tallinn, Tartu, Riga and Vilnius. LHV employs over 220 people. LHV Pank's banking services have over 60,000 customers. LHV's pension funds have 130,000 customers. LHV Pank services are oriented to private individuals and Small and Medium-Sized businesses. LHV is one of the biggest brokers on the NASDAQ Baltic stock exchanges and the biggest broker for Baltic retail investors on international markets. LHV was established in 1999.

About Horizon 2020

On 1 January 2014, the European Union launched a new research and innovation funding programme called Horizon 2020. Over the next seven years almost €80 billion will be invested in research and innovation projects to support Europe’s economic competitiveness and extend the frontiers of human knowledge. The EU research budget is focused mainly on improving everyday life in areas like health, the environment, transport, food and energy. Research partnerships with the pharmaceutical, aerospace, car and electronics industries also encourage private-sector investment in support of future growth and high-skilled job creation. "InnovFin – EU Finance for Innovators", the new generation of EU financial instruments and advisory services was developed under Horizon 2020 to help innovative firms access finance more easily. "InnovFin – EU Finance for Innovators" will help to inject up to EUR 48 billion in investments in Research and Innovation across Europe.

Press contacts:

EIF: David Yormesor
Tel.: +352 42 66 88 346, e-mail: d.yormesor@eif.org

 

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