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Exporting a proven model: Innovation Financing A presentation by KfW Development Bank. Knowledge Economy Forum IX, May 5, 2010 Roland Siller First Vice President Europe and Caucasus KfW Development Bank. 60 Years of KfW Financing with a Public Mission.

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exporting a proven model innovation financing a presentation by kfw development bank

Exporting a proven model:Innovation FinancingA presentation by KfW Development Bank

Knowledge Economy Forum IX, May 5, 2010

Roland Siller

First Vice President

Europe and Caucasus

KfW Development Bank

60 years of kfw financing with a public mission
60 Years of KfWFinancing with a Public Mission
  • Promotional bank of the Federal Republic of Germany
  • Founded in 1948 as public law institutionKreditanstalt für Wiederaufbau (KfW)
  • Shareholders: 80% Federal Republic,20% federal states
  • Headquarters: Frankfurt am MainBranches: Berlin and Bonn
  • Balance sheet (2009): EUR 400 billion
  • Representative offices: about 60 offices and representations worldwide
  • No of employees: 4,265
  • Best rating: AAA/Aaa/AAA

Balance sheet total vs promotional banksEUR in billions (2008)

Balance sheet total vs commercial banksEUR in billions (2008)

a bank with a wide array of roles and functions
A Bank with a Wide Array of Roles and Functions

Domestic promotional business

International

project and

export finance

Promotion of

developing and

transition countries

Promotion of

SMEs, entrepreneurs, environmental and

climate protection

business start-ups

Promotion of

housing, education,infrastructure andsocial development

Financing of municipal infrastructure projects and promotion in Europe

Innovation Finance as an integral part of KfW Mittelstandsbank

3

3

approach and volume of innovation financing in germany role of kfw mittelstandsbank
Approach and Volume of Innovation Financing in Germany Role of KfW Mittelstandsbank

1) Concept

KfW

Commercial bank, venture capital

or private equity company

Entrepreneur

Application

Application

Financing agreement

Refinancing, equity

2) Instruments

Financing of Innovations

Promotion

of Start-ups

Promotion of

emerging,

growing and

established companies

Venture Capital Programmes (Equity)

Subordinated Loan Programmes (Mezzanine)

Senior Loan Programmes

3) Volumes

adaptation of kfw innovation finance programmes to the russian federation
Adaptation of KfW Innovation Finance Programmesto the Russian Federation

Status quo in the Russian Federation:

  • Innovation definition focuses on hi-tech and global innovation concepts
  • Existing promotion programmes follow that approach (hardly bankable), no SME focus

Aims of corporation between Vnesheconombank and KfW Development Bank:

  • Fostering innovation on SME level
  • Strengthening the Russian banking sector in terms of know-how and programmes
  • Implementing a 100 mln EUR programme for Russian banks to be onlent to SME

Approach of KfW Development Bank:

  • Adaptation of existing programmes to Russia; utilization of experiences in Germany
  • Support in the development and anchorage of a broader innovation definition including innovative modernisation (high demand potential in Russia; bankable products possible)
  • Establishment of cooperation with development institutions like Vnesheconombank and RosBR
  • On-lending via eligible partner banks for risk sharing and faster market penetration (KfW-Model)
  • Focus on SME as a sector with the most promissing growth potential
  • Step by step approach: loan based programme followed by equity and mezzanine programmes

!! Sustainable success of the programme more important than quick wins !!

overview financial and private sector development europe caucasus activities and portfolio
Overview: Financial and Private Sector DevelopmentEurope&CaucasusActivities and Portfolio

Activities

  • Financing / Refinancing of SME and Microbanks in the regions
  • Greenfielding of 13 banks
  • Establishment of best practice structured finance projects such like the EFSE
    • (European Fund for South East Europe; biggest microfinance fund worldwide: >700 mln EUR in assets;<600 mln EUR loan portfolio);
    • 113.000 clients, 200.000 loans disbursed- benchmark for public-private partnership projects

Instruments

  • Senior loans
  • Subordinated loans
  • Equity participations
  • Risk participations, guarantees
  • Technical assistance

Countries

  • Southeast Europe: Serbia, Montenegro, Kosovo, Bosnia & Herzegovina, Albania
  • EU Accession Countries: Croatia, Macedonia, Turkey, Bulgaria (EU), Romania (EU)
  • Eastern Europe: Russia, Ukraine, Moldova
  • Caucasus: Georgia, Armenia, Azerbaidschan

Portfolio

  • 5 billion EUR (as of April 2010)
    • of which 2,4 billion EUR are channelled through the financial sector (mainly for SME promotion purposes)
slide7

Thank you very much

for your attention !

slide8
EFSE – Innovative StructureAdaptation of Fund Structure for advanced Innovation Finance (Mezzanine, Equity)

Fund Volume in EUR million

Dec 05 Dec 09 Target 2011

Private Investors

A-Shares

and Notes

20383631

60 95 100

66 248 269

 148726 1.000

International Finance Institutions

B-Shares

Donor Funds

C-Shares

Leverage of funds: EFSE pursues a Tiered Funding Strategy