EIF and European Commission finalise the implementation of the“Multiannual Programme for SMEs”

The European Commission and the European Investment Fund (EIF) signed today in Luxembourg the agreements on the implementation of the Multiannual Programme for enterprise and entrepreneurship, in particular SMEs (MAP2001-2005). The MAP provides the new legal basis for the EU-funded financial instruments, ETF Start-up and the SME Guarantee Facility, managed by the EIF since 1998 within the framework of the Growth and Employment Initiative. The EEA (European Economic Area) countries are eligible under this programme, which total EU budget commitment amounts to EUR 317 million, and which will be managed by the EIF. Extension of the MAP to the candidate countries is foreseen early 2002.

Under the MAP framework, the ETF Start-up Facility will concentrate on the financing of incubators and seed capital funds and therefore represent a very useful complement to the other venture capital resources managed by the EIF, which are directed towards early stage funds.

For the SME Guarantee Facility, the EIF will continue to issue partial guarantees to cover portfolios of loans. The new SME Guarantee Facility includes now four windows: guarantees for SMEs with growth potential, guarantees for investments made by small enterprises in information and communication technologies (ICT), guarantees for micro-credit, and equity guarantees.

Finally, as an addition to the previous Growth and Employment Initiative, the MAP also includes a new instrument: the Seed Capital Action. It aims to support seed funds or incubators where the EIF has invested, allowing the recruitment of junior investment managers. This will address the shortage of venture capital fund managers and contribute to the development of this industry in Europe.

EIF Chief Executive Walter Cernoia noted the importance of the new framework : &the MAP complements the various instruments already managed by the EIF in support of SMEs and perfectly symbolises the role of the EIF as a European financial institution, serving EU objectives and policies, such as entrepreneurship, innovation and employment. Such cooperation with the EU and the Commission is one of EIF's main priorities.

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 in 2000), 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 160 funds all over the EU as well as in Central and Eastern Europe. Its Venture Capital portfolio amounts to some EUR 2billion, of which some EUR 800 million were invested by the EIF in 2001, in 56 new funds. The investment strategy of the EIF focuses essentially on the promotion of European technology through investments in early stage venture capital funds located in the Union and the Candidate Countries.

EIF guarantee instruments facilitate access to debt finance for SMEs through the intermediation of a wide range of banks and financial institutions. The latter are allowed to reserve equity to those operations at a rate of 20% in accordance with EIF's status as a Multilateral Development Bank under the European Capital Adequacy Directive. The total EIF SME Guarantee portfolio covers EUR 3.7 billion, implemented throughout the Union with 86 financial intermediaries or national guarantee schemes.