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February 1st 2011, Milan

Richard Pelly Chief Executive. PerMicro Launch Event. February 1st 2011, Milan. EIF at a Glance. EU specialised institution for SMEs, risk financing Venture Capital and Mezzanine (fund of funds) Structuring and Guaranteeing portfolios of SME and microfinance loans/leases.

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February 1st 2011, Milan

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  1. Richard Pelly Chief Executive PerMicro Launch Event February 1st 2011, Milan

  2. EIF at a Glance EU specialised institution for SMEs, risk financing Venture Capitaland Mezzanine (fund of funds) Structuring and Guaranteeing portfolios of SME and microfinance loans/leases Authorised Capital € 3bn EIB: 61% EU: 29 % Fin. institutions: 9 % To be issued: 1% Geographic Focus / Intermediaries EU 27, EFTA, Candidate Countries Distributing through Banks and Funds AAA rated Staffing, Culture and Values Dual Objective of Meeting EU Policy Goals & Generating a Satisfactory Return on Equity

  3. Microfinance in Europe • Micro-enterprises make up 90% of businesses in Europe and 99% of yearly enterprise creation – 33% launched by the unemployed • Important growth generating market segment with social and financial impacts BUT • Market is fragmented and underdeveloped (particularly in Western Europe) • Large variety of MFIs (small non-profit organisations or governments-owned development agencies, large commercial banks) • Microfinance often characterised by subsidised services and not self-sustainable Efficient Support of the European Microfinance Sector Important for Entrepreneurship and Job Creation

  4. EIF as Catalyst of Microfinance within the EU • Microfinance as an emerging strategic business line • Expertise and track record (EPPA, JASMINE, RCM, JEREMIE) • Financing capacity • Dedicated resources • Geographic reach across EU-27

  5. EIF Microfinance Operating Model

  6. Microfinance: EIF’s Activities since 2000 • EIF manages various mandates designed to encourage microfinance institutions to increase financial availability to micro-entrepreneurs and micro-entreprises • Through these mandates, EIF has already invested in microfinance • Guarantees transactions signed under the EU MAP (2001-2006) and CIP (2007-2013) programmes for a total commitment of € 636m • Participation in securitisation transactions for a total commitment of € 120m • JASMINE Technical Assistance for € 6m to support microfinance providers: 15 institutions selected and supported (including PerMicro) Broad Range of Microfinance Activities

  7. The Progress Microfinance Initiative: “Umbrella” for Existing Microfinance Initiatives • Initiative launched in 2010 to promote microfinance in the EU-27 • EUR 200m funded by EC (DG EMPL) budget and EIB - managed by EIF • Key objectives: increase availability of finance for enterprise creation for the benefit of micro-entrepreneurs, the unemployed and groups with limited access to the traditional banking system • Key aspects: rapid market impact, leverage effect, EU-wide promotion, social inclusion/job creation

  8. Microfinance Sector in Italy • 95 % of SMEs in Italy are micro-enterprises • Market fragmented with some initiatives from public and private sectors but no cohesiveness; focus mainly on Southern Italy so far • Microcredit requirements differ from region to region • 82 % of microfinance institutions are not-for-profit (cooperatives micro-lenders, NGOs) • The beneficiaries are start-ups and micro-companies of less than five employees, as well as women and immigrants. Only 27% of the credits granted are to women and 21% to immigrant populations • Evidence that the microfinance sector in Italy is nevertheless in a phase of steady development and emergence of dynamic institutions aiming for strong growth and real sustainability

  9. PerMicro’s Model • Targets and strategy in line with EPPA criteria • Higher risk, earlier stage funding, capacity building • Shareholders and governance have a clear focus on microcredit • Centralised assessment and decision making process • Branch network with high degree of outreach, particularly in Northern and Central Italy • Strong track record, management and staff expertise in microfinance • Strong attention to costs and risk covering, balance between social objectives and commercial approach • Sustainability of model will encourage other players to start micro- ventures in Italy EIF’s First Direct Equity Investment into a Non-Bank Microfinance Institution

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