EIF, EBRD, European Commission and DEG step up SME support in the Western Balkans

By Axel  Reiserer

The European Investment Fund (EIF) has signed a €14.5 million subscription agreement with the European Bank for Reconstruction and Development (EBRD) to support small and medium-sized enterprises (SMEs) in the Western Balkans region under the Western Balkans Enterprise Expansion Fund (ENEF). DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH invested €5 million into this fund.

ENEF is part of the Western Balkans Enterprise Development and Innovation Facility (WB EDIF) platform, which aims at enhancing and supporting access to finance for micro and small to medium-sized enterprises across the Western Balkans. The Fund focuses on development and expansion capital for SMEs with high growth potential in their respective markets. ENEF provides primarily equity, quasi-equity and convertible bonds to selected investee companies.

The EBRD plays a key role in ENEF, as its biggest single investor and its investment adviser. The Bank will also make parallel co-financing available to the Fund through its Local Enterprise Facility (LEF).

ENEF works in synergy with the other pillars of WB EDIF, which are: (a) the Enterprise Innovation Fund (ENIF) for innovative companies from the start-up phase to the expansion of their development; (b) the Guarantee Facility, which provides guarantees and counter guarantees to financial intermediaries in the region; and (c) the Technical Assistance Facility to support governments of beneficiary economies in implementing policy reforms supporting the growth of SMEs.

To date, three agreements for a total of €60 million have been signed under the Guarantee Facility with ProCredit Albania, Procredit Bosnia and Herzegovina and ProCredit Kosovo in support of local SMEs.

Speaking at the signing ceremony in London today, EIF Regional Business Development Director, Hubert Cottogni, said: “We are delighted to sign this agreement in our own name as well as on behalf of the European Commission. Together with the recently signed agreements under the Guarantee Facility and the forthcoming launch of ENIF, this signature of ENEF marks another milestone in the advancement of the WB EDIF platform, which is the single largest private development project in the Western Balkans to promote SME growth and innovation.”

Claudio Viezzoli, EBRD Director, Western Balkans, added: “This is a ground-breaking initiative because it marks the first time that international financial institutions have come together to support the private sector, and in particular SMEs in the Western Balkans. Furthermore, this initiative enjoys strong support from all beneficiary countries and is an example of working together for a common purpose.”

Dr. Peter Thimme, DEG Director Europe/Middle East/Central-Asia stated: “ENEF is an important initiative to provide equity and quasi-equity to SMEs in the Western Balkans. The Fund will help to improve the availability of long term risk capital in the region and enable qualified companies to finance their development and expansion opportunities.”

The Western Balkan Enterprise Development and Innovation Facility (WB EDIF) promotes the emergence and growth of innovative and high-potential companies as well as the creation of a regional Venture Capital market. The €14.5 million of capital pulled together under this Facility by the EU, international financial institutions, beneficiaries and bilateral donors will provide direct financing for SMEs in the region.

About EIF

The European Investment Fund's (EIF’s) central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over €7.9 billion at end 2013. With investments in over 435 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over €5.6 billion in over 300 operations at end 2013, positioning it as a major European SME guarantees actor and a leading microfinance guarantor.

About WB EDIF

WB EDIF is an EU-funded initiative which aims at increasing the financial resources made available to SMEs based in the Western Balkans, as well as providing technical assistance for strategic investments, particularly in infrastructure, energy efficiency and private sector development, to support socio-economic development and EU accession across the Region.

WB EDIF will include four components, aiming at:

- early- to development stage equity financing in innovative SMEs; this will be done by the newly created Enterprise Innovation Fund (ENIF)

- providing development and expansion capital to established high-growth potential SMEs; this will be done by the newly created Enterprise Expansion Fund (ENEF)

- improving SMEs’ access to bank lending and lowering the cost of borrowing by providing SME loan portfolio guarantees to financial intermediaries; this will be done under a regional Guarantee Facility

- creating a favourable regulatory environment for innovative and high-potential SMEs; this will be done through a Technical Assistance Facility supporting beneficiary governments in the implementation of priority reforms.

The EIF’s €14.5 million contribution to WB ENEF (of which €9.5 million is on behalf of the European Commission) is made alongside a further €19 million from the EBRD (€3 million of which is on behalf of the Italian Investment Special Fund). DEG’s ommitment to WB ENEF of €5 million totals the current size of ENEF to €38.5 million. EIF is acting as an ENEF investor in its own name as well as on behalf of the European Commission.


About DEG

DEG, a subsidiary of KfW Bankengruppe, finances investments of private companies in developing and emerging economies. It focuses on equity investments, project- and corporate-finance in emerging markets world-wide. Its financing products, which are offered at market-oriented conditions, comprise long-term loans, mezzanine financing and equity capital. Furthermore, DEG offers advisory services and technical assistance to private companies and its clients.

EIF Press Contact: Mr David Yormesor, d.yormesor@eif.org

DEG Press Contact: Barbara Schrahe-Timera, barbara.schrahe-timera@deginvest.de