EIF supports multi-country venture capital fund dedicated to the life sciences

The European Investment Fund (EIF), the Luxembourg based venture capital institution of the EU, has signed a commitment to invest up to EUR 29 million in MVM International Life Sciences II, a UK-based, multi-country fund focusing on start-up and early stage initiatives in life sciences. The Fund's target size is GBP 72 million (EUR 115 million), to be invested in SMEs in the following sectors: biotechnology, drug discovery, biopharmaceuticals, diagnostics, medical technology and devices, and applications of information technology in the above fields. Its geographical emphasis is on the UK, Ireland, Denmark, Sweden and the Netherlands. The Fund will be managed by MVM Limited, a subsidiary of the Medical Research Council (MRC), which is the primary UK government agency funding biomedical research.

Mr. Walter Cernoia, EIF's Chief Executive, underlined that the creation of SMEs in the EU life sciences sector belongs to the core of the EIF's investment objectives. It is also clearly advocated in the Framework Programme as set forth at the Stockholm Summit of March 2001, where the European Council placed renewed emphasis on frontier technologies and biotechnology in particular. This operation is therefore fully in line with the EIF's mandate.

The EIF is the European Union's specialised financial institution for Venture Capital and SME Guarantees. Based in Luxembourg, the EIF was established in 1994 as a joint venture between the European Investment Bank (which has become its majority shareholder), the European Commission and a number of European banks and financial institutions.

The EIF is now a major player in the European Venture Capital market. It has invested in some 150 funds all over the EU as well as in Central and Eastern Europe. Its Venture Capital portfolio exceeds EUR 2.0 billion and it has invested during 2001 in 57 new funds for an overall amount of EUR 800 million. The investment strategy of the EIF focuses essentially on the promotion of European technology through investments in Venture Capital funds located in the Union and the Accession Countries.

EIF guarantee instruments facilitate access to debt finance for SMEs through the intermediation by a wide range of banks and financial institutions. The latter are allowed to allocate capital to those operations at a rate of 20% in accordance with EIF's status as a Multilateral Development Bank under the European Solvency Ratio Directive.