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How Greek businessmen benefit from Eu funds

Mr. Pier Luigi Gilibert* is the Chief Executive Officer at European Investment Fund in an interview with explains  the EU funding aid schemes and their benefits for Greek and European economy and reveals the new agreements with our country.

In 2014, European Investment Fund (“EIF”) celebrated its 20th anniversary – 20 years of support for small and medium-sized enterprises across Europe. Can you please explain to our readers what is the European Investment Fund today, what is its relationship with the European Investment Bank (“EIB”)?

EIF is part of the EIB Group and it is an institution of the European Union. We are a specialist provider of risk finance to benefit small and medium-sized enterprises (SME) across Europe. Our shareholders are the European Investment Bank (EIB), the European Union, represented by the European Commission, and a wide range of public and private banks and financial institutions. Our aim is to promote entrepreneurship, growth, innovation, research and development, employment and regional development. We design financial instruments and those are implemented through financial institutions, micro finance providers, guarantee institutions, venture capital and private equity funds, and others, to enhance SMEs’ and micro enterprise’s’ access to finance.

Do you think that Europe’s SMEs have been benefited from the European programmes? How the European Commission via the EIB Group and particular via your institution aims the small and medium-sized enterprises (SME) across Europe today?
We take great pride when assessing the impact that EIF had through its more than two decades of activity: by the end of 2016, we will have supported more than 1.8 million SMEs through financial instruments deployed by 400 finance and guarantee providers and more than 600 private equity and venture capital funds, by mobilizing €174 billion (including an EIF commitment of €23.6 billion). In 2015 alone, we signed more than 200 transactions with financial intermediaries that, along with private investors, mobilised approximately EUR 27 billion; we estimate that these funds supported some 110,000 SMEs employing circa 700,000 people.

In 2014, the European Commission and the European Investment Bank Group (EIB and EIF) have launched a new generation of EU financial instruments and advisory services to help innovative firms access finance more easily. Over the next seven years, it is expected that the "InnovFin – EU Finance for Innovators" products will make available more than €24 billion of financing for research and innovation (R&I) by small, medium and large companies and the promoters of research infrastructures.

In addition, in mid-2014 the COSME Loan Guarantee Facility (LGF) with an estimated budget of EUR 690m (2014 - 2020) was launched by the European Commission as a Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises, which supports European enterprises growth and research and innovation (R&I). EIF, through COSME LGF, is offering guarantees and counter-guarantees, including securitisation of SME debt finance portfolios, to selected financial intermediaries (e.g. guarantee institutions, banks, leasing companies, etc.) to help them to provide more loans and leases to SMEs, who might be having difficulties in accessing the traditional banking system.

Why do we need the Investment Plan for Europe?

Europe needs to remedy the investment gap in innovation, strengthen its global competitiveness and boost economic growth and job creation. With this in mind, European Fund for Strategic Investments -EFSI- was launched in July 2015 by the European Commission (EC) and the European Investment Bank (EIB) Group as part of EC President Juncker’s Investment Plan for Europe. In line with our mission and expertise the EIF delivers the EFSI SME Window. Our EFSI-backed equity investments, as well as guarantees under the COSME and InnovFin programmes, aim to ensure that financing finds its way more rapidly to economically viable SME projects across EU Member States, including Greece.

Within only a bit more than one year from EFSI’s launch we have approved agreements around Europe that should mobilise more than €58.1 billion of the initially foreseen total mobilised investment target of €75 billion. Our engagement to date is estimated to ensure access to affordable finance for more than 287 000 SMEs and mid-caps. In light of EFSI’s success, the EC has recently agreed to a €500 million increase of the available resources, leading to a new total mobilised investment objective of €82.5 billion. The Investment Plan for Europe supports growth, and we intend to put as much effort as is needed to channel this to Greece as well.

EIF and Greece: a long lasting relationship? Can you tell us on the impact that EIF has on the Greek SME’s and what support have you provided since EIF’s 1st operation in 2001?

EIF has a long-standing presence in the country. Suffice to say that we committed no less than EUR 380 million in favour of SMEs across a breadth of instruments that include guarantees, equity and microfinance. As of today, it has entered into 25 agreements with banks and venture capital vehicles committing an aggregate volume of over EUR 380 million that mobilised investments of almost EUR 1.1 billion. For example, approximately 3200 Greek SMEs were benefitted via the JEREMIE initiative (EUR 276,8m) that ended this September; that means in practical terms that every EUR 1 we invested in Greece, led to approximately EUR 2,89 invested in SMEs. Through numerous agreements with the majority of the Greek banks, we have guaranteed a loan portfolio to SMEs and microenterprises of approximately EUR 770 million.

We are trying to cover the country with our programs, setting synergies with the majority of the Greek banks, including non-systemic banking institutions, such as the Pancretan Cooperative Bank (PCB) and the Cooperative Bank of Karditsa (CBK).

The EIF and Pancretan Cooperative Bank, in 2011, signed a guarantee and a loan agreement aimed at supporting with a €6m portfolio of small loans to micro-businesses and self-employed entrepreneurs in Greece, under the European Progress Microfinance Facility (Progress Microfinance), funded by the European Commission and the European Investment Bank and managed by the European Investment Fund.

EIF signed the first guarantee agreement with Cooperative Bank of Karditsa this past May, aimed at supporting micro-enterprises in Greece under the EU Programme for Employment and Social Innovation (EaSI). This new EaSI guarantee agreement with the CBK will cover a loan portfolio of EUR 5 million for over 300 micro-borrowers targeting mainly farmers, young unemployed borrowers, cooperatives and social enterprises, as well as micro businesses active in the green economy.

EIF is also currently an investor in seven venture capital funds of a total size of more than EUR 290 million mobilized. A recent example will be the EIF’s implementation of the JEREMIE initiative in Greece. This initiative has proved to be particularly successful on the equity side, where four venture capital funds were supported and which are investing in technology companies. Let me tell you an example of success: Workable, a Greek start up launched by a talented young team where a JEREMIE backed fund invested in 2013, two years later Workable obtained an additional investment of USD 34m from US venture capital funds.

Allow me to ask you what is your purpose of your trip here in Athens? Are the Greek business community expecting some news to be announced soon?

Next week, during my visit in Athens, I will be signing four more agreements for the benefit of Greek enterprises and mobilising resources from various EU programmes. During 2016, six new agreements have been signed to bring investment to Greece thanks to the EU mandates that are in place. Two of them – the EUR 130 million COSME guarantee and the EUR 100 million InnovFin guarantee - are backed by the European Fund for Strategic Investments (EFSI). In the next three months, EIF will be working to complete four addition commitments with Greek banks that will greatly provide much needed guarantees via the COSME and InnovFin programmes and mobilizing apprx EUR 480 million.   

In addition, I am delighted to announce the signature of two “EaSI” guarantee agreements of EUR 6 million. The EaSI Guarantee scheme was launched in June 2015 and is funded by the European Commission and managed by the EIF. While the two EFSI transactions aim to enhance competitiveness and incentivise investments in innovation, EaSI is a new financial instrument dedicated to employment and social innovation. EIF’s guarantee benefits from additional financial backing under Horizon 2020, the EU Framework Programme for Research and Innovation.

The first EU-supported Greek equity fund Diorama Investments was supported by EIF under COSME, and four more equity funds under the JEREMIE initiative. Shall we expect a continuation in this path?

With regards to the equity market, EIF is looking forward to putting its expertise in practice for the development of an equity investment platform. Institutional investors often see EIF’s engagement in a fund as proof of a sound concept. Several funds that achieved significant results and visibility in this segment, benefitted previously from EIF’s strong catalytic support. Hence we believe that our role has been vital in fostering the development of the European venture capital market.

We also see a need to scale up the microfinance industry and we have already started the implementation of the EaSI guarantee instrument that will specifically cover micro-loans. In all of these, we are working closely with the authorities locally as, in any country, we always need their strong support in order to design and implement local interventions in a timely and efficient manner.

EIF entered to our daily conversations as an entity when the JEREMIE initiative was appeared six years ago via the Greek banking system. What can we expect next and how do you remain committed to the country?

The EIF will continue to gauge the Greek market in order to find further investment opportunities. As a matter of fact, and within the context of the Investment Plan for Europe, we have strengthened our local presence in Greece with a dedicated team of professionals based in Athens. We want to bring further investment into Greece. Besides the four new commitments that will be signed next week, EIF has a concrete pipeline of new deals that is currently being analysed as well as new facilities that are country specific that we are working on.

We are pursuing EU objectives; we are, thus, fully aligned with the general policy objective of job creation through innovation and entrepreneurship. For this to happen, SMEs should gain access to finance so that any viable investment plans are met with funding.  EIF will do exactly that: devote full effort of its experienced personnel in order to help the Greek SMEs access to finance. This brings growth and employment thus supporting the Greek economy. In this attempt, we will not be alone. We are confident that the cooperation of the Greek authorities will prove pivotal in pooling the necessary funds to make a difference. And with this cooperation, leveraging private funds will be achieved so that the impact of public funds is magnified and broadened.

*Mr. Pier Luigi Gilibert is the Chief Executive Officer at European Investment Fund since March 17, 2014. He served as a Director General of Directorate for Lending Operations in the EU and EU candidate countries at European Investment Bank since 2010 till 2014.
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