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EU funds financial instruments implementation progress

EU funds financial instruments implementation progress. 16.06.2011. Agenda. Support for self-employment and business start-ups Loans for development of enterprise competitiveness Guarantees for development of enterprise competitiveness

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EU funds financial instruments implementation progress

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  1. EU funds financial instruments implementation progress 16.06.2011

  2. Agenda • Support for self-employment and business start-ups • Loans for development of enterprise competitiveness • Guarantees for development of enterprise competitiveness • Holding fund for the investment in guarantee, high-risk loans, and venture capital funds and other financial instruments • Information on holding fund takeover process

  3. Support for self-employment and business start-ups 1730signed agreements of participation in program 801 submitted business plans 393 signed loan agreements in amount of 5,22 m LVL Assigned grants for sustaining of the economic activities inamountof1,03 m LVL Assigned13grants for repayment of loan inamountof22 027 LVL

  4. Support for self-employment and business start-ups

  5. Targetresultsoftheprogram Support for self-employment and business start-ups

  6. Loans according to sectors ( LVL ) Support for self-employment and business start-ups

  7. Regions (the number of supported projects) Support for self-employment and business start-ups

  8. Support for self-employment and business start-ups • Amendments in the program (in force since 18.05.11.) • Expandedscope of the corresponding beneficiaries (now includes persons, which already carries out economic activities, but applies for support under the program with a newly created enterprise operating in different sector) • Enable training to all project applicants

  9. Causes of bank refusal to issue a loan: 1st stage ( before submitting business plan): Discrepancy with formal indications Applicant own refusal (after consultations appear doubts about project viability or hidden information is required) 2nd stage: Bad credit history, large private liabilities Unproven project viability (market, competitiveness, etc.) Economically unjustified project expenses Project will not add new value Project is unprofitable or creates only small value added Insufficient knowledge, management abilities Project applicant does not submit additionaly required information Support for self-employment and business start-ups

  10. Causes of applicants own refusal: Unwilling to comply with the conditions of financial support, unwilling to sign the papers; Due to the doubts of possible negative effect of external factors or lack of own knowledge Support for self-employment and business start-ups

  11. Loans for development of enterprise competitiveness

  12. Loans for development of enterprise competitiveness Issued loans in “Manufacturingsector” (amount in LVL) Issued loans according to sectors (amount in LVL) Foodstuff production 9% Agriculture, foresty and fisheries 0% Other 9% Furniture manufacturing 10% Mining industry 0% Other 0% Production of other vehicles 4% Wood, cork products manufacturing, except furniture, straw and braided products manufacturing 36% Electro energy, gas supply, heat supply and air conditioning 47% Vehicles and trailer manufacturing 11% Manufacturing 53% Pharmaceutical basestock and preparation production 16% Chemical substance and products 5% 55 loans assigned

  13. Loans for development of enterprise competitiveness Issued loans according to regions (number of projects supported)

  14. Loans for development of enterprise competitiveness Causes for bank refusal of loan: • Enterprise in difficulties • Tax liabilities • Insufficient own co-finance for investment loan Causes for diminishing implementation pace: • Majority of enterprises arewith existing liabilities (thus, diminished collateral values, difficulties, inability to refinance existing liabilities, etc.) Amendments • Minimal interest rate was decreased by 1,5 pp in April 2011

  15. Loanamountspaidout (LVL)

  16. Guarantees for development of enterprise competitiveness • Competitiveness (credit) guarantees: • Temporary Framework aid from April 1, 2009 till December 31, 2010 • De minimis aid since January 1, 2011 • Focus on production sector • Maximum guarantee amount 1.5 million EUR, maximum risk share 80 %

  17. Guarantees for development of enterprise competitiveness

  18. Guarantees for development of enterprise competitiveness

  19. Guarantees for development of enterprise competitiveness

  20. Guarantees for development of enterprise competitiveness

  21. Export credit guarantees Export credit guarantees Since 1 July 2009 Max amount - 1 m EUR, max risk - 90% Issued guarantees as of 01.06.2011: Signed 64 export credit guarantee agreements in amount of 3,56 mLVL Guarantee covers deals in amount of 18,71 m LVL Countries: Russia, Belorussia, Azerbaijan, Georgia, Kazakhstan, Nigeria, Lithuania, Finland, etc. From 01.07.2010. to 31.12.2010 guarantees for deals to ES and several OEVD countries were available – issued 5 guarantees in amount of 0.341 m EUR

  22. JEREMIE Ieguldījumu fonds Holding fund (EUR 91.5m) Financial enginering Instruments Equity-related instruments Debt-related instruments Seed and Start-up fund Risk capital Funded Risk Sharing Product Selected financial intermediary SEB EUR 22m Swedbank EUR 22m Imprimatur EUR 5.8m Baltcap EUR 20m Signed agreement = > 26.03.2010 26.03.2010 11.06.201022.01.2010 Final beneficiaries SMEs 22

  23. BaltCap: Overall Progress • Risk capital fund of 30 m EUR established in early 2010 • Around 100 investment cases reviewed since launch of the fund (by end-March 2011) • 3 investments of 3m EUR so far • Target for 2011: • 2 moreinvestments (2 transactions of 2.75 m EUR have been already made in 2011) • Planned investments in SMEs in 2011 ~ 6 m EUR 23

  24. Imprimatur Capital: Overall Progress • Seed and Start-up fund of 7.2 m EUR established in mid-2010 • Investment strategy: specialized technology focused start-ups • Around 110 investment cases reviewed since launch of the fund (by end-March 2011) • Seed Fund: 5 investmentsintotal of500 000 EUR • Start-up Fund: 1 investmentintotalof400 000 EUR (originated through the Seed Fund) • Target for 2011: • 3-4 investments by the Seed Fund (as of end-May twofinalized) • 1-2investments by the Start-up Fund (as of end-May one finalized) 24

  25. Equity instrument summary • 9 investments in total of 3,9 m EUR • 4-7 moreinvestments expected during 2011 • JHF initially allocated amount 34.7 m EUR • JHF currently committed amount 25.8 m EUR • Additional financial instrument – Co-Investment fund to be set up by end 2011 25

  26. Funded risk sharing instrument • 4 loans of 2.3 m EUR issued as of end-May 2011 • Modifications in program: • Public notice process after PSC decisions and contract amendments • Implemented modifications • Increased maximum loan size (30% of portfolio must respect 2% concentration limit; otherwise, no single loan above 6mln EUR – of which 50% JHF funds) • Increased loan maturity to 10 years • Increased risk profile for the eligible loans • Extended availability period (by 6 months) to account for delays in the modification of the instrument 26

  27. HoldingFund takeover process • Prepared report on HoldingFund takeover and submitted to Cabinet of Ministers • Takeover by LGA • Examination of report until end of the June • Takeover until end of the year

  28. Thank you! Brīvībasiela 55, Rīga, LV 1519Phone: 67013101Fax: 67280882E-mail: pasts@em.gov.lvWebpage: www.em.gov.lv

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