€30 million will be provided over the next four years
The European Bank for Reconstruction and Development (EBRD), with support from the European Union (EU) through the Neighbourhood Investment Facility, is launching the Small and Medium-sized Enterprise (SME) Finance and Advice Facility as an important part of its broader efforts towards the development of the private sector in Armenia.
The facility is part of the EU4Business initiative to support firms in Armenia. Within the framework of EU4Business in Armenia, the EU is providing more than €30 million of support over the next four years.
The facility will deploy EU funds blended with those provided by the EBRD and other investors to support Armenian SMEs. The overarching goal is to improve access to finance for SMEs through a combination of investment projects and technical assistance and a diversification of sources of finance. This is expected to contribute to a number of positive outcomes such as increased employment, increased foreign and domestic investment, higher levels of transparency, capital market development and diversification of economic activity.
With private equity an important but under-represented component of financing in Armenia, one instrument under consideration by the EBRD and EU is an investment in a private equity fund focused on SMEs. The EBRD Transition Report 2015 highlights how equity financing – and private equity capital in particular – can play an important role in supporting investment, increasing productivity and improving management within firms. Other financial instruments which are currently under-represented or lacking in Armenia may also be considered under the facility.
A further component of the programme is offering business advisory services to SMEs on a cost-sharing basis through the EBRD’s Advice for Small Businesses (ASB) team. ASB will promote international best practices through business advice provided by local consultants, industry expertise provided by international advisers and capacity-building to strengthen local institutions that support SMEs.
Mark Davis, Head of EBRD operations in Armenia, said: “The EBRD is delighted to have the support of the EU in making this important new SME-support initiative a reality. It is a testament to the EU’s commitment to Armenia and the strength of the ongoing collaboration between the EBRD and the EU.”
Mr Davis continued: “There is a need to guide the growth strategies of Armenia’s leading SMEs through technical assistance and financing. We see the lack of private equity as one of the highest transition gaps in Armenia and welcome proposals from prospective private equity fund managers who can credibly and commercially address opportunities in Armenia.”
"The EU is delighted by this opportunity to team up with the EBRD to create investment opportunities for Armenia; business development is at the core of EU development cooperation with its partner countries,” the Head of Cooperation at the EU Delegation, Hoa-Binh Adjemian, added. “We hope that with this we will be able to attract more foreign investors and showcase the potential that Armenian SMEs have to share with the rest of the world.”
More information on the private equity fund.
Contact EBRD: Loretta Martikian
Contact EU: Head of Cooperation