Mobilising innovation: InnovFin SME Guarantee
Innovative companies are vital to the growth of SMEs in Europe. However, innovative SMEs often struggle to access financing. The InnovFin SME Guarantee (InnovFin SMEG), guarantees part of a bank’s loan portfolio to companies with significant innovation potential, supporting those whose value lies in their ideas, trademarks and patents, rather than in tangible assets.
In Austria, the EIF has committed EUR 161m in two transactions with Austria Wirtschaftsservice and Unicredit Bank Austria, both early supporters of InnovFin SMEG. Together with the private sector commitments, we expect almost EUR 352m to reach innovative SMEs in the country.
InnovFin is a joint EIB Group and EU initiative resourced under Horizon 2020, the EU research programme for 2014-2020, and EFSI. It hosts a range of equity and debt financial instruments, including InnovFin SMEG.
Working hand in hand with business angels: The European Angels Fund
Business angels are a valuable source of capital and advice for entrepreneurs. The European Angels Fund (EAF) connects business angels with entrepreneurs and the venture capital community, and enables business angels to co-invest with the EIF in innovative SMEs.
The idea is to unite the business angel’s unique expertise with the EIF’s experience and network as one of Europe’s foremost venture capital investors. Each business angel is granted the maximum degree of freedom under the EAF, therefore supporting the individual’s investment style while still providing significant financial support.
The EAF, which is advised by the EIF, has already committed more than EUR 250m to around 90 carefully selected business angels, who have in turn built a portfolio of more than 450 SME co-investments.
In Austria, around EUR 20m has been committed to more than 10 business angels, who have together invested in 90 SMEs.
Award-winning deals: securitisation
Supporting a functioning securitisation market in Europe is key to improving SMEs’ access to financing. Securitisation allows banks to diversify their funding sources and achieve economic and regulatory capital relief, providing liquidity and freeing up capital for loans and leases to SMEs.
In 2016, the EIF participated its first public asset-backed securities transaction in Austria - ROOF Leasing - helping to further open up the public securitisation market in the country, and winning the EMEA Finance Achievement Award 2016.
In 2017, the EIB Group also structured the first synthetic securitisation in Austria that benefited from the support of the European Fund for Strategic Investments (the Juncker Plan) by providing guarantees on a EUR 330m portfolio of Austrian and German loans originated by Hypo Vorarlberg Bank AG. With this financial support, Hypo Vorarlberg will expand its lending to households and corporate customers undertaking energy efficiency refurbishments or new constructions of Near Zero Energy Buildings (NZEB) as well as SMEs and mid-caps in Austria.
In 2018, the EIB Group has closed another synthetic securitisation transaction with a large Austrian bank in an amount of EUR 44.8m, employing once more Junker Plan funds.
Harnessing investment potential in Central Europe: CeFoF
The Central Europe region offers huge potential for SME growth. At the end of 2017, the EIF launched the Central European Fund of Funds (CeFoF), a regional fund of funds to boost equity investments in Austria, Czech Republic, Hungary, Slovakia and Slovenia. Each of these countries contributed to the fund alongside the EIF and IIB.
CeFoF builds on the EIF’s proven fund-of-funds experience and will contribute to the defragmentation of the region’s equity markets.
In Austria, the fund of funds welcomed a EUR 12m investment from the Development Bank of Austria (OeEB), on behalf of the Austrian Ministry of Finance. This is expected to leverage three or four times as much in funding to SMEs and small mid-caps.