January 2013 EIF CORPORATE OPERATIONAL PLAN

Transcription

1 January 2013 EIF CORPORATE OPERATIONAL PLAN

2 Table of Contents 1 Vision, Values and Strategy of EIF Key Principles and Drivers Exceptional times requiring an exceptional response: EIFs role Medium-Term Objectives Business Planning and Operations: Venture and Growth capital EIF as the Cornerstone investor Expected commitment volumes Guarantees, Credit Enhancement and Microfinance Key objectives and strategy Expected commitment volumes Funds utilisation / absorption Regional business development and geographical reach Structural Funds Joint partnerships Risk sharing Annex 1: Glossary of Terms 2

3 Introduction and summary The EIF three year Operational Plan reflects the exceptional economic challenges in Europe as well as its expanded role in the delivery of the EU 2020 strategy. The amount of Venture and Growth Capital and SME loan leveraged will rise from EUR 12bn in 2012 to EUR 16bn in The recently developed new instruments and products, catalysing private sector investment, will be streamlined, consolidated and scaled up. The EIF will also support the EIB capital increase through higher commitments of the Risk Capital and Mezzanine for Growth mandates, as well as joint SME risk sharing and loan transactions with key banks. The EIF is positioned to act as a leading Entrusted Entity for the European Commission under a number of centrally managed financial instruments for SMEs and micro enterprises, as well as continuing its role as a partner of Managing Authorities for the mobilisation of Structural Funds. Partnerships will also be developed extensively with Financial Institutions Shareholders (FISG) and national promotional institutions as requested by the EU Council in June Operating profit will rise from EUR 56m to 69m, whilst maintaining the cost/income ratio in the 50/52% range. At the same time ROE will revert to pre-crisis levels of 5%+ as a result of lower provisions. A prudent risk management policy will leave ample capital headroom and assure the maintenance of the AAA rating. 3

4 1 Vision, Values and Strategy of EIF Vision Europe s leading risk partner for entrepreneurship and innovation Values Excellence * Teamwork * Integrity * Responsibility * Accountability * Customer-driven 1.1 Key Principles and Drivers Pursue European Union Policy of the promotion of Innovation, knowledge-based society, entrepreneurship, employment and economic and social cohesion, in support of Smart, Sustainable and Inclusive Growth. Mobilise and lever public and private capital as a cornerstone and impact investor in European Venture and Growth Capital. Strengthen the EIF s position as the leading guarantor of SME loan portfolios, catalysing bank lending to SMEs. In line with the European Council conclusions 1, extend EIF s role as partner with national promotional institutions, including its Financial Institutions Shareholders, to achieve, in both the Venture Capital (VC) and the SME guarantee business, complementarity of instruments, optimisation of capacities and best practice sharing. Streamline, develop or adapt an increasing number of financial equity and debt products, in cooperation with the EIB and the European Commission (EC), in order to fulfil policy objectives while ensuring the highest compliance standards. Maximise outreach and value added for SMEs: measure and report on impact at beneficiary level. Control the staffing and cost levels through productivity initiatives and appropriate outsourcing. Optimise the use of own capital, whilst defending the AAA rating. 1.2 Exceptional times requiring an exceptional response: EIFs role Five years into a financial, economic, and increasingly social crisis, the challenges for the EU are paramount: Restore economic activity to reduce unemployment and support investments to secure the EU s long-term productive potential; Address aggravated market failures, especially in the area of SME financing; Safeguard further integration and convergence. 1 [ ] develop EIF Venture Capital Activity in liaison with existing National Structures (European Council June 2012). 4

5 The EIB Group plans to address some of these issues with its capital increase and the EIF will contribute through a significant increase in the activity under the Risk Capital Mandate (RCM) and the Mezzanine for Growth facility (MfG). The EIB COP also foresees joint EIB-EIF actions in the asset backed securities (ABS) market, the blending of EU resources managed by the EIF with EIB loans, and further support to microfinance (Progress - EPMF) and social impact investing (ESEIF). 1.3 Medium-Term Objectives Maximise impact on growth of SMEs and start-ups through provision of Risk Capital" Fully commit all available resources, including the Risk Sharing Instrument (RSI-pilot) and implement swiftly the successor programmes Competitiveness for SMEs (COSME), Horizon 2020, Progress II, and EIB funded MfG and RCM. Focus on the utilisation rate of committed resources, in order to reach effective impact at final beneficiary level. Continue to expand the equity investment activity in partnership with Member States and other public and private partners. Further enhance EIF s pioneering role in the development of the European Venture Capital market, by addressing market failures or gaps through the catalysing of private capital investment from partners in Corporate Venturing, Pan-European business-angels and social impact investing. Further strengthen the Knowledge Transfer Strategic Partnership and implement instruments with national institutions in the field of Technology Transfer and Seed Capital. Maintain intensive cooperation with the European Commission, the EIB, EIF s Financial Shareholders, Member States and Regions and work on the effective deployment of financial instruments, including off the shelf products or Leveraged Holding Funds in the context of EU Regional Policy. Catalyse increased Bank lending and leasing through the provision of First and Second loss guarantees Explore all possibilities of joint operations with the EIB in response to the crisis (asset backed securities, joint risk sharing, mid-cap portfolio guarantees). Continue to lead the re-establishment of the securitisation and covered bond market for SME assets. Maximise the impact of the Risk Sharing Instrument (RSI) and make full use of SMEG and successor programme resources. Sustain Operating Profit levels with the view of achieving a sustainable Cost/Income ratio and a long run ROE of 5%-6% Ensure satisfactory level of strategic value-added, sustainability and scalability for all new initiatives and mandates. Maintain the quality of the assets and the guarantees portfolio. Enhance productivity and cost flexibility to be achieved through an increased level of synergies with the EIB, outsourcing of selected fund management tasks and recruitment of staff on short-term contracts. 5

6 Maintain value creating Risk Management and the AAA rating Gradually increase the use of own capital, especially for portfolio credit instruments, with a view to maximise its utilization over the COP period. Enhance equity portfolio management in view of continued optimization of EIF revenues and policy objectives, in particular as new platforms are established. Build an integrated Enterprise Risk Management in line with the growth in funds under management, new products and mandates. Build integrated, stable, scalable systems and processes Finalise the implementation of the Long-Term Information Strategy, focusing on: Establishing the mandate and product platforms through the necessary evolution of the new integrated and flexible systems. Building on the existing infrastructure at EIB Group level, in particular for Group-wide solutions and synergies. Strengthening the analytical capabilities across product lines through controllable, robust and auditable management information. Promote and enhance an excellent internal and external reputation Further enhance external communication to promote the EIF s unique competences and expertise. Proactively manage the relationships with mandators, shareholders and stakeholders, align communications activity to EU policy objectives. Deepen and extend initiatives towards the strengthening of the EIF as an employer of choice, with the progressive alignment to EIB conditions. Attract, train and retain staff. 6

7 2 Business Planning and Operations: Venture and Growth capital The Equity Capital activity ranges from University Technology Transfer through to Growth Capital / Mezzanine and over the COP period the EIF will: Grow commitments across its entire investment spectrum; Expand country and regional Funds-of-funds capacity to increase available resources throughout the EU, while achieving the widest geographical diversification; Continue to enhance mobilisation and leverage of private capital and to increase the investors base in support of EU policy objectives. With traditional private institutional investors withdrawing from the market, the need for EIF to support the sector has increased substantially. Totally embedded in EU Policy to maintain and develop the European Venture Capital activity, the EIF remains the only pan-european actor, enjoying a high level of credibility and reputation. Over the COP period the EIF will make an even higher contribution than in previous years, retaining its position as the key reference investor in the sector, backing successful teams and promulgating best market practice. A further increase in total annual volume committed to more teams (both existing and new) will result in an expected leverage of over EUR 23bn of new money into the sector over three years. This strategy requires: The continued strong backing of EIF s shareholders, making additional financial resources available over the medium term. In this respect, increased funding from the EIB under the RCM and MfG, together with the forthcoming COSME and Horizon 2020 instruments for early stage investments from the EC, is essential; Increasing the financial capacity of existing partnerships with national promotional institutions and engaging in new partnerships; Mobilising and levering additional private capital through investments of Corporates, Business Angels and Family Offices; Expanding the regional capacity and seek to manage new Structural Funds in the context of the new programming period. In this way the EIF will continue its double-pronged strategy of investing directly as a Limited Partner (LP) into VC funds and co-investing alongside Business Angels and Family Offices, but also of increasing available capital by corner-stoning new funds-of-funds where the EIF acts as LP and Manager (it is important to emphasise that the primary purpose of these investment vehicles is to channel third party capital and attract new investors and that in all such cases the EIF's internal tried and tested investment and risk management processes will be fully applied, and with appropriate regular reporting to the Board in line with the procedure in place for the past five years). 7

8 Chart 1: Assets Under Management evolution over the COP period EIF as the Cornerstone investor The following diagram sets out the basis of EIF s action during the next COP period. Each component of the investment spectrum (line 2) should benefit from financial support coming from mandators (line 1) according to their specific policy focus. For instance, the earliest stage is at the moment the least well-supported part of the chain and where the challenges (line 3) are most evident. Chart 2: EIF activity across the equity/mezzanine finance spectrum 1 Resources Technology Transfer Accelerator Investing in VC Funds Investing in Growth Capital Mezzanine 2 Investment Focus Tech Transfer POC Seed Early Stage Late VC Expansion/ Development Capital Lower Mid-Market 3 Strategic Challenges Instruments to stimulate innovation, competitiveness and cross-border investment Fill funding ERP ERP gap left by Institutional investors Support VC ecosystem and decrease dependency on Public finance Catalyse hybrid debt finance for growth EC EIB/EIF MS/Private 8

9 2.1.2 Expected commitment volumes The commitment volumes presented in Table 1 are predicated on the current strong market demand for EIF to continue with its now well-established core business of supporting existing teams coming back to fundraising (and where often the existing investor base has diminished irrespective of team quality), combined with newly-emerging teams where, without a substantial upfront commitment from the EIF, no first close could be reached. The objective is to invest in an increased number of teams, bringing higher leverage of private capital and better contributing to a wider development of the industry. In addition, the EIF is running specific development projects in response to identified market needs. Examples are: The agenda of the Knowledge Transfer Strategic Partnership being progressed with the EC (Joint Research Centre DG Research and Innovation) and certain national public institutions in the field of Technology Transfer and Seed Capital. During 2012, the volumes and spread of activity achieved by Technology Transfer type transactions evidence that the market is evolving and able to absorb significantly higher amounts than in the past years. The available JEREMIE and IPA capacity boost the total commitments for The projections in the COP as presented are based on the currently available resources. Should additional resources be secured, the volume numbers would be reassessed. In this respect the EIF is in discussions with all concerned stakeholders to identify funds and financial instruments suited to this area; Continuing the roll-out of the European Business Angels programme which has begun well in its pilot phase in Germany and where a number of other Member States are showing interest; Cementing the launch of the Corporate Innovation Platform whereby corporate money will be levered into a structure to support VC Funds. Besides the usual selection of VC fund managers and fund-of-funds investment services, the EIF would initialise and facilitate relationships between corporates, the underlying fund managers and the SMEs through a formalised collaboration framework; Launch of the European Social Entrepreneurship and Impact Facility (ESEIF), responding to a market gap by investing in Funds which in turn invest in enterprises addressing social issues as part of their business model; Expanding commitments to hybrid and mezzanine capital for growth enterprises including the extension of the recent German Mezzanine mandate concept to other geographies. A common thread running through all the above examples is the requirement to seek coinvestment from entities outside the EIF, thereby increasing the total investment capacity and impact. Using resources already under management in order to lever in additional money has proved to be a successful approach that will be continued during the COP period. Further examples will be the finalisation of the Dutch Venture Initiative (DVi); the Luxembourg Future Fund (LFF); and the raising of Neotec2 in Spain. 9

10 Table 1: Equity-Mezzanine commitments EUR m E 2014 Indicative 2015 Indicative Technology Transfer Venture Capital Later Stage / Growth Capital Total commitments 1,350 1,525 1,625 1,760 Exp catalysed volume 7,078 7,500+ 8,000+ 8,700+ Exp # of transactions By source of commitment MFG/MDG RCM EIF OR CIP Structural/other regional funds Third party/private Total commitments 1,350 1,525 1,625 1, Guarantees, Credit Enhancement and Microfinance Key objectives and strategy EIF s key objective is to catalyse new lending for SMEs through financial intermediaries. This will be achieved by offering risk sharing, capital protection and/or funding solutions through a full suite of products, ranging from first loss portfolio guarantees to credit enhancement of senior tranches in ABS transactions. Funded solutions will also be used for microcredit providers. EIF will seek maximum impact and aim to: Commit in full the available budget(s) under SMEG / RSI and successor programmes (Horizon 2020, COSME); Collaborate fully with EIB in Group joint operations; Blend EIF s capacity, expertise and EU Value Added, o o o achieving higher leverage on the available budget; partnering with promotional banks and other local players; managing and/or advising on guarantee programmes locally. 10

11 The EIF will blend the resources from third party mandates with its own risk guarantee capacity, e.g. under RSI and potentially also under local mandates, bringing EU Added Value and higher leverage on public resources. A broad range of financial institutions will be targeted by size, geography and product specialisation, including promotional banks, guarantee institutions and development agencies, with the objective to reach out a high number of final beneficiaries and build a diversified portfolio of risk sharing instruments across Europe. The implementation plan will require: enhanced market segmentation of the European financial institutions to adequately capture specific needs and address market gaps; development and management of deeper relationships with key EIB/EIF bank counterparts; and extension of the range of partner bank institutions, especially smaller/regional lenders and leasing companies. Funding solutions for commercial lenders will be offered mainly through guarantees on ABS structures, where the EIF credit enhancement helps to place the senior notes with cash investors. The EIF intervention has so far successfully mobilised new cash investors that would otherwise not invest in SME ABS, as they see the EIF AAA rating, its zero risk weighting and its supranational status as important elements for their credit decision and an attractive risk/return combination. The recently designed EIB Group ABS Initiative for SMEs aims at providing additional support to SME lenders through a joint intervention of the EIF as guarantor for third party note-holders and the EIB as investor in senior notes. With the joint EIB and EIF intervention, the EIF will be able to offer larger underwriting capacity with a streamlined internal process, hence making SME securitisation transactions more viable for the originating banks and thus providing higher added value in terms of SME support. Other joint operations - providing portfolio guarantees and EIB funding - will be sought through the combination of the EIF guarantee (e.g. under RSI, etc.) with EIB Loans for SMEs. In the microfinance segment, the EIF has already tested different instruments (senior loans, subordinated loans, portfolio risk sharing loans, first loss portfolio guarantees, and equity participations) which effectively address the needs of microfinance providers and support the development of their microcredit activities. This wide product mix positions the EIF as the EU provider of both capital protection and funding solutions for SME portfolios and microcredit providers. 11

12 2.2.2 Expected commitment volumes The COP implementation strategy will target financial institutions across the whole EU and other eligible countries. This will be achieved through different products and mandates: The SME Guarantee Facility has already proven its high added value for guarantee institutions across Europe, as well as for commercial lenders in smaller markets/niche segments (particularly in CEE): the EIF will continue to build up the SMEG portfolio with the aim to cover most eligible countries. It is expected that the CIP successor programme (COSME) will continue to offer flexible solutions to financial intermediaries with annual budgetary resources in line with the current programme (roughly EUR 100m per year). SME securitisations transactions are planned to be originated mostly in well-tested ABS markets (e.g. Germany, UK, Belgium, Netherlands, France, Austria, Italy, Spain, Poland, etc.). In particular, the EIB Group ABS Initiative for SMEs will target originators with solid track record in both securitisation and SME lending. Under this new initiative, the EIF and the EIB will aim to support new SME lending with annual commitments of around EUR 1,500m (of which EUR 1,000m from EIB as cash investments and EUR 500m from EIF as guarantees). The commitments in individual transactions would indicatively be EUR m, as such combined ticket size would represent the minimum critical mass for deal making, i.e. sufficiently attractive for originators to initiate the launching of an ABS transaction (smaller tickets could be considered for smaller, second-tier banks). The selection criteria of the originators shall be based inter alia on the characteristics and quality of both the target banks and the relevant jurisdiction of the ABS issuance (such as Originator s strategic relationship with EIB Group, demonstrated ability and commitment to originate new SME loans, past performance on absorption, proven track record in securitisation to minimise execution risk, established ABS framework in the respective countries, etc.). Overall, the annual EIF own risk guarantee commitments for securitisation transactions are expected to be in the range of EUR m, with the bulk of it being through joint EIB-EIF operations. Under the RSI facility, with the expected additional budget and the introduction of counterguarantees, the EIF will be able to serve both commercial lenders and guarantors, thus adding to its direct guarantees the distribution channels and geographical coverage of national guarantee institutions. Going forward, the gross guarantee volume (i.e. including the 20% EC first loss protection) is estimated between EUR 600m and EUR 750m per annum, assuming that the RSI successor programme (under Horizon 2020) will continue with similar budgetary contributions. The microfinance activity under the current mandate (Progress) will continue to develop within the EU. With the projected EUR 50m of new commitments per annum the Programme will reach full utilisation in The EIF will continue to pursue the regional dimension of its guarantee business through local mandates. These are expected to cover both the use of Structural Funds and/or the mobilisation of national/regional budget, potentially to be combined with EIF/EC resources, so as to achieve maximum impact. In so doing, the EIF will provide management services and, where possible, additional guarantee capacity as well as know-how and best practice through joint partnerships with national institutions. 12

13 Table 2: Guarantees/Microfinance commitments EUR m E 2014 Indicative 2015 Indicative First Loss (CIP/COSME) Securitisation / Credit enh Exp EIB commitment on joint ops 1,000 1,000 1,000 RSI - 1st loss EC / 2nd loss EIF Regional / Structural Funds Microfinance Total 1,220 1,700 1,750 1,960 of which EIF own risk 754 1,230 1,320 1,500 Exp catalysed volume 5,225 6,600+ 6,600+ 7,300+ Exp # of transactions Funds utilisation / absorption The EIF is committed to speeding up the absorption of funds across its wide range of financial instruments. Particular focus during 2012 was given to the debt and guarantee transactions within the JEREMIE Holding Funds (EUR 1.3bn) in order to find ways to boost the level of financing reaching SMEs. As a result of the rapid implementation of a number of contractual modifications, the absorption of the JEREMIE funds increased during As of the end of October 2012, EUR 0.4bn of loans and equity investments have been disbursed to SMEs. Other initiatives, including certain product enhancements have been identified and are being implemented to ensure that each Holding Fund under EIF management is fully utilised by For this purpose, defined absorption targets have been set for the following three years. Utilisation remains a priority on the other mandates as well, particularly MfG, RCM, Progress, CIP- SMEG and RSI. The absorption targets for these facilities for 2013 and the expected evolution in the following two years are reported below: 13

14 Table 3: Cumulative Absorption/Utilisation targets 2013 E 2014 E 2015 E JEREMIE* 49% 77% 100% MfG** 32% 38% 44% RCM** 70% 70% 70% CIP-SMEG** 65% 75% 88% RSI** 21% 50% 79% Progress Microfinance** 50% 63% 70% * calculated as a % of Holding Fund size ** calculated as a % of the amount committed to FIs at Y-1. For the guarantee products, absorption refers to the loan portfolio generated by the intermediaries MfG will be fully committed by March An increase of the facility will ensure continued support for the market beyond the current year. The funds absorption is expected to grow continuously despite an increased commitment pace. From the original EUR 1bn, 75% is foreseen to be disbursed by RCM is a fully mature, revolving mandate. A consistently high level of commitment maintains the absorption rate stable at around 70% over time. Such a target represents an annual EUR 300m to EUR 400m volume of disbursement of RCM money in the market. SMEG has proven over the years the attractiveness of the first loss guarantee product. The yearly budget available has consistently been committed to generate additional SME financing. In 2015, disbursed loans to SMEs are forecasted at 88% of total guaranteed volumes. The RSI pilot was launched in 2012 and is expected to be quickly deployed, with all the origination activity taking place between Q3 12 and Q1 14. The portfolio will rapidly ramp up with disbursement to SMEs expected to reach 80% of commitment towards the end of the planning period. The Progress Microfinance facility has been deployed since its inception in 2010 with a multi-product strategy and by seeking the widest geographical reach. The EIF will continue to closely monitor the funds made available to micro-borrowers by the intermediaries: 70% of total commitments are foreseen to be utilised by

15 3 Regional business development and geographical reach The EIF currently manages a range of different mandates and products across EU Member States and regions, leveraging on EC funding (Structural Funds - SF/ Instrument for Pre-Accession Assistance IPA) as well as national and EIF/EIB resources. Delivering both via dedicated equity fund-of-funds and debt structures, as well as multi-product platforms under JEREMIE, the EIF acts as delegated fund manager by providing tailored regional solutions: 1. The regional funds-of-funds activity totals EUR 2.0bn. Initially focussed in Germany, the Iberian Peninsula, Turkey and UK, but recently expanded to include the EIF s first crossregional Fund-of-funds in the Baltics, this business activity is expected to grow further during the COP period. 2. Two structures backing EIF portfolio guarantees amounting to EUR 0.1bn have been put in place to date and advanced negotiations are in course for at least two more. 3. Through the JEREMIE initiative, the EIF directly manages 13 Holding Funds, totalling EUR 1.3bn of Structural Funds under management. The EIF continues to strengthen the relationships with Member States and Regions ensuring that mandates are fully committed and disbursed to SMEs. Through this successful implementation, the EIF has begun to explore the next generation of mandates, such as in Spain where Neotec2 is currently under negotiation and in Turkey where the Growth & Innovation Fund (TGIF) is planned. In addition, with its dedicated regional strategy and organisation, the EIF has been able to reach out to an increased number of new, regionally-active banks and funds, many of which were unfamiliar with public support schemes and which have become a critical success factor in providing risk provision and fresh liquidity in the crisis. Both the next generation of Structural Funds mandates as well as EIF s Funds-of-funds activity will benefit from this regional infrastructure. With regards to regional business outlook for the future, the EIF has several lines of strategy: 3.1 Structural Funds The budget for the Structural Funds programming period is expected to remain stable but with an increased focus on Financial Engineering instruments. The EIF has begun to develop a dedicated roadmap encompassing a targeted number of Managing Authorities and advanced discussions have already taken place with several regions in relation to planning for the new programming period. This will enable continued support for Cohesion Policy by leveraging expertise through market knowledge and financing best practice. 3.2 Joint partnerships EIF s role as a partner with national promotional institutions will be expanded, developing new initiatives in joint partnership with Member States including the management of revolved Structural or 'legacy' Funds. The EIF will build on the experience, strengths and expertise to structure and manage tailored and bespoke investment programmes for Member States and Regions. 15

16 Already 2012 has seen the EIF establish a new Fund using revolved Structural Funds in the Baltic region (EUR 100m). In addition, work has commenced on joint structures in Poland (between EUR 90m and EUR 180m) and Cyprus (EUR 100m). 3.3 Risk sharing The EIF will promote risk sharing models either through a European centralised platform or with 'off the shelf solutions delivered at national levels. Delivering these models can be achieved via: EIF acting as a delegated manager through leveraged debt structures or equity investing; co-investing through partnerships with promotional institutions using blended funds (equity/debt); and/or through advisory and capacity building in close cooperation with Member States to ensure adequate transfer of know-how. Chart 3: EIF s expected partnership development 2 Structural Funds/IPA FoFs The above chart outlines EIF s planning and strategy for the period for its Partnership development. This includes initial estimates for future new mandates including guarantee structures with Member States but also the management of new Structural Funds from the next programming period The chart does not provide a view of the investments made by centrally managed programmes like CIP, RSI, RCM, etc., which cover countries (like Belgium) not covered by regional partnerships. 16

17 In summary, the EIF is fully equipped to offer services ranging from fully delegated instrument management through joint venture type partnerships in addition to advisory services ranging from assistance in Operational Programme planning, ex-ante market analysis and 'off the shelf' instrument design. This range of services will be delivered utilising centralised or decentralised budgets (e.g. CIP/COSME or ERDF/ESF respectively), joint partnerships (e.g. Baltic Innovation Fund), delegated management of guarantee or equity schemes (e.g. Spanish Business Angels, Cyprus Guarantee Fund) and/or advisory services (e.g. ex-ante assessment Romania). The strategy as highlighted above will be tailored to the needs, expertise and demand of individual Regions and Member States guided by the regional know-how developed by the EIF over recent years. Current dialogue with Member States and Regions varies from full delegated fund management for the Programming Period, co-financed equity platforms, local cofinanced guarantee facilities, national partnerships using Structural Funds and development of off the shelf products. This dialogue is reflected in the continued partnerships with Lithuania, Romania, Bulgaria, Greece, Cyprus, Spain, France, Italy, Portugal, Malta and Slovakia. Going forward, relationships are being fostered in Estonia, Ireland, several French and Spanish Regions, the Western Balkans, Czech Republic, Croatia, the Netherlands and Slovenia. The EIF will deploy its expertise and market know-how to ensure that the appropriate investment strategy can be delivered whilst remaining committed to engaging with national institutions and local agencies to maximise the benefits of joint partnerships. Overall, 2015 would see EUR 2.1bn assets under management for new initiatives using both debt and equity solutions and a total of at least EUR 1.1bn under management using Structural Funds with EIF playing a management role. 17

18 Annex 1: Glossary of Terms ABS AUM CAD CDD CIP COP COSME DVi EaR EC EIB EL ESEIF EU FI FIN FoF FTE G&S HF IPA JEREMIE LFF LP LTIS MfG OPS OR PE P&L PMF POC RCM RMM ROE RSI RWA SME SMEG TGIF TRM TTA VC Asset-Backed Securities Assets Under Management Capital Adequacy Directive Contrat à durée déterminée limited contract Competitiveness and Innovation Framework Programme Corporate Operational Plan Competitiveness for SMEs Dutch Venture Capital initiative Exposure at Risk European Commission European Investment Bank Expected Loss European Social Entrepreneurship and Impact Facility European Union Financial Intermediary Finance EIF Service Fund of Fund Full Time Equivalent Guarantees & Securitisation EIF Service Holding Fund Instrument for Pre-Accession Assistance Joint European Resources for Micro to Medium Enterprises Luxembourg Future Fund Limited Partner Long Term Information Strategy Mezzanine Facility for Growth Operations EIF Service Own Resources Private Equity Profit and Loss Progress Microfinance Facility Proof of Concept Risk Capital Mandate Risk Management EIF Service Return On Equity Risk Sharing Instrument Risk Weighted Assets Small and Medium-sized Enterprise SME Guarantee Facility Turkish Growth and Innovation Fund Transactions and Relationship Management EIF Service Technology Transfer Accelerator Venture Capital 18