MICROCAPITAL BRIEF: EIF, EBRD, European Commission, DEG to Allocate $19.8m for Small, Medium-Sized Enterprises (SMEs) Via Western Balkans Enterprise Expansion Fund (ENEF)

The European Investment Fund (EIF), a public-private partnership that provides risk capital to small and medium-sized enterprises (SMEs), and the European Bank for Reconstruction and Development (EBRD), a UK-based multilateral development bank, recently announced an agreement to allocate a total of EUR 14.5 million (USD 19.8 million) to support investing in SMEs in the Western Balkans region through the Western Balkans Enterprise Expansion Fund (ENEF). EIF’s commitment, the size of which has not been specified, was made on behalf of both itself and one of its shareholders, the EU’s European Commission (EC). Also among the participants is the German development finance institution Deutsche Investitions-und Entwicklungsgesellschaft (DEG), which committed EUR 5 million (USD 6.9 million) of the total. ENEF is a financing arm of the EU-funded Western Balkans Enterprise Development and Innovation Facility, an initiative that aims to support economic development in the region by expanding access to capital for SMEs, offering technical assistance to governments and supporting the creation of a venture capital market.

ENEF typically makes equity investments from EUR 1 million (USD 1.4 million) to EUR 10 million (USD 14 million) in SMEs. Launched in December 2012, it has a target fund size of EUR 100 million (USD 140 million). As of December 31, 2012, EIF reported EUR 1.4 billion (USD 1.8 billion) in total assets. In 2013, EBRD invested EUR 8.5 billion (USD 11.4 billion) in 392 projects across 34 countries. As of December 31, 2012, DEG reported total assets of EUR 4.6 billion (USD 6.4 billion).

By A’kos Szebeni, Research Associate

About Western Balkans Enterprise Development and Innovation Facility (WB EDIF)

The Western Balkans Enterprise Development and Innovation Facility (WB EDIF) is a European Union-funded initiative that was launched in December 2012 with the aim of supporting development in the region by expanding access to capital for micro-, small and medium-sized enterprises (MSMEs), offering technical assistance to governments and supporting the creation of a venture capital market. WB EDIF has four components: (1) the Enterprise Innovation Fund (ENIF), an investor in development-stage companies that are deemed to be “innovative;” (2) the Enterprise Expansion Fund (ENEF), a fund that provides equity financing to development- and expansion-stage SMEs that are deemed to have the potential for high growth; (3) a facility guaranteeing the lending portfolios of intermediary financial institutions that lend to SMEs; and (4) a Technical Assistance Facility that advises governments on creating a regulatory environment that supports the three other efforts. ENIF typically invests from EUR 100,000 (USD 137,000) to EUR 1.7 million (USD 2.3 million) with a minimum fund size of EUR 40 million (USD 55 million), and ENEF typically invests from EUR 1 million (USD 1.4 million) to EUR 10 million (USD 14 million) in SMEs and has a target fund size of EUR 100 million (USD 140 million). Additional financial data about the fund are not available.

About European Investment Fund (EIF)

The European Investment Fund (EIF) is a provider of risk finance to organizations that lend to small and medium-sized enterprises (SME) in Europe. The fund is a public-private partnership whose shareholding structure includes the European Union’s European Investment Bank; the European Union as represented by the European Commission; and 29 financial institutions from European Union member states plus Turkey and Croatia. EIF is a member of the EIB Group, the parent organization of the European Investment Bank. As of December 31, 2012, EIF reported EUR 1.4 billion (USD 1.8 billion) in total assets, return on assets of 2.4 percent and return on equity of 2.9 percent.

About European Bank for Reconstruction and Development (EBRD)

The European Bank for Reconstruction and Development (EBRD) is a multilateral development finance institution headquartered in London, England. The bank began operations in 1991 upon the agreement of 40 countries, and it is owned by 61 countries as well as the European Investment Bank and the European Union as of 2014. It aims to finance operations that are both commercially viable and assist development in 29 countries in Eastern Europe, Central Asia and North Africa. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs). In 2013, EBRD invested EUR 8.5 billion (USD 11.4 billion) in 392 projects across 34 countries.

About Deutsche Investitions-und Entwicklungsgesellschaft (DEG)

Deutsche Investitions-und Entwicklungsgesellschaft (DEG), a member of SPELL OUT KfW Bankengruppe, is a German development finance institution offering long-term project and company financing. DEG provides assistance to all sectors, with particular attention to agribusiness, financial institutions and infrastructure and processing industries. As of December 31, 2012, DEG reported total assets of EUR 4.6 billion (USD 6.4 billion).

Sources and Additional Resources:

European Bank for Reconstruction and Development (EBRD), “EIF, EBRD, European Commission and DEG step up SME support in the Western Balkans,” http://www.ebrd.com/pages/news/press/2014/140225b.shtml

MicroCapital, February 5, 2014, “European Bank for Reconstruction and Development (EBRD) Lends $14m to Societe Generale Banka Montenegro to Support On-Lending for Housing,” https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-lends-14m-to-societe-generale-banka-montenegro-to-support-on-lending-for-housing/

MicroCapital, July 16, 2013, “European Bank for Reconstruction and Development (EBRD) Loans $2m to Kreditimi Rural i Kosoves of Kosovo,” https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-loans-2m-to-kreditimi-rural-i-kosoves-of-kosovo/

MicroCapital, March 21, 2012, “European Investment Fund, Banca Transilvania Sign $10m Loan Agreement for Microfinance in Romania,” https://www.microcapital.org/microcapital-brief-european-investment-fund-banca-transilvania-sign-10m-loan-agreement-for-microfinance-in-romania/

MicroCapital, January 3, 2012, “Deutsche Investitions-und Entwicklungsgesellschaft GmbH (DEG), European Fund for Southeast Europe (EFSE), European Investment Fund to Loan $38m to Alternatifbank A.S. (ABank) of Turkey,” https://www.microcapital.org/microcapital-brief-deutsche-investitions-und-entwicklungsgesellschaft-gmbh-deg-european-fund-for-southeast-europe-efse-european-investment-fund-to-loan-30m-to-alternatifbank-a-s-abank-of-tu/

MicroCapital, October 7, 2011, “Deutsche Investitions-und Entwicklungsgesellschaft (DEG), Oesterreichische Entwicklungsbank (OeEB) to Invest $10m in Inecobank to Develop Small and Medium Enterprises in Armenia,” https://www.microcapital.org/microcapital-brief-deutsche-investitions-und-entwicklungsgesellschaft-deg-oesterreichische-entwicklungsbank-oeeb-to-invest-10m-in-inecobank-to-develop-small-and-medium-enterprises-in-armenia/

MicroCapital Universe Profile: Western Balkans Enterprise Development and Innovation Facility (WB EDIF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Western+Balkans+Enterprise+Development+and+Innovation+Facility+%28WB+EDIF%29

MicroCapital Universe Profile: European Investment Fund (EIF), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Investment+Fund

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD), http://microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+%28EBRD%29

MicroCapital Universe Profile: Deutsche Investitions-und Entwicklungsgesellschaft GmbH (DEG), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Deutsche+Investitions-und+Entwicklungsgesellschaft+GmbH+%28DEG%29

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