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Graham CopeHead of Region
Bru
ssels
, 30 N
ovem
ber
2010 Selection Process
of a Financial Intermediary
22
Agenda
EIF expertise in selecting intermediaries
EIF experience within JEREMIE
The key principles
Main process – The Call for Expression of Interest
Main process – Selection & Approval
Conclusions & Lessons Learned
33
Since its foundation, EIF’s core role has been selecting and then transacting with financial intermediaries
EIF expertise in selecting intermediaries
KEY FACTS
Years since foundation 16
Venture Capital transaction numbers 354
Guarantee & Securitisation transaction numbers
285
Number of countries selections made inVC - 26
G&S - 30
Approx. number of Financial Intermediaries reviewed
2635
Approx. number of Due Diligence missions mad
600
44
Ven
ture
& G
row
th C
ap
ital P
ortfo
lio€ 4.6bn Net Equity Commitments across Europe at 30.09.2010
Austria 54Belgium 68Bulgaria 2Cyprus 4Czech Republic 35Denmark 93Estonia 6Finland 104France 707Germany 532Greece 16Hungary 13Ireland 89Italy 257Latvia 40
EU 27
EFTA/EEA
EU Candidate Countries
Lithuania 41Luxembourg 32Malta 8Netherlands 69Norway 34Poland 55Portugal 59Romania 28Slovakia 5Spain 285Sweden 250Switzerland 56Turkey 118United Kingdom 1037Other & Non EU 468
EUR m
55
€ 13.6bn in Outstanding Guarantee Commitments across Europe at 30.09.2010
EU 27
EFTA/EEA
EU Candidate Countries
Other Countries
Gu
ara
nte
es a
nd
Secu
ritisatio
n
Austria 294Belgium 367Bulgaria 145Cyprus 1Czech Republic 141Denmark 244Estonia 16Finland 212France 1790Germany 1122Greece 84Hungary 55Ireland 3Italy 4580Latvia 37
Lithuania 40Malta 1Netherlands 736Norway 7Poland 488Portugal 243Romania 53Serbia 50Slovakia 25Slovenia 89Spain 1542Sweden 359Turkey 183United Kingdom 400Other & Pan EU 476
EUR m
66
JEREMIE is relatively new, but EIF process is almost identical
EIF experience with JEREMIE
KEY FACTS
Years since start of JEREMIE 4
Number of VC applications received 86
Number of G&S applications received 42
Combined Number of DD’s undertaken 28
Number of approved transactions 19
Number of Countries involved 10
77
Being a Community body with the express statutory purpose to “contributeto the pursuit of Community objectives” (cf. Article 2/1of the EIF Statutes),the Fund, in its dealings with economic operators, is committed to respectingthe following fundamental EU principles regarding public procurement:-
Transparency; Equal Treatment; Non-discrimination and Confidentiality.
EIF launches calls for expression of interest, in accordance with Commission Regulation 1828/2006 setting out the rules for the implementation of Council Regulation 1083/2006 of the European Parliament and of the Council of Structural Funds.
Our Processes, Procedures and Practice are designed and implemented to respect these principles and rules.
Key principles – EIF and JEREMIE
88
Main Process: the call for expression of interest
Progress
Progress
ProcessProcess
Fact findingFact finding
Instrument design
Instrument design
Internal approvalInternal approval
Selection criteria
Selection criteria
Inv. Board approval
Inv. Board approval
State aid assessment
State aid assessment
PublicationPublication
Q & A processQ & A process
Call deadlineCall deadline
Follow-on from gap analysis, discussions with key market players and associationsFollow-on from gap analysis, discussions with key market players and associations
Expert driven process to specify product details, to meet market needs whilst
respecting regulations
Expert driven process to specify product details, to meet market needs whilst
respecting regulations
Internal review and approval process including specialists from legal, risk
management & compliance
Internal review and approval process including specialists from legal, risk
management & compliance
Monitoring committee’s approval of a specific selection criteria
Monitoring committee’s approval of a specific selection criteria
Full presentation of product and call documents to local
IBs
Full presentation of product and call documents to local
IBs
Formal state aid assessment by competent local
authorities
Formal state aid assessment by competent local
authorities
Website and other media to ensure
market awareness
Website and other media to ensure
market awareness
Ensuring answers are communicated to all
Ensuring answers are communicated to all
99
Main Process: selection and approval
Progress
Progress
ProcessProcess
Draft board report
Draft board report
Eligibility checkEligibility check
Selection PanelSelection Panel
Pre-selection phase
Pre-selection phase
Set up of due diligence
Set up of due diligence
Final SelectionFinal Selection
Due diligenceDue diligence
Board submission/approv
al
Board submission/approv
al
Call deadlineCall deadline
To FI, mandator and media as appropriate
To FI, mandator and media as appropriate
Initial check to ensure ‘EoI’ passes eligibility checklist with support of compliance
Initial check to ensure ‘EoI’ passes eligibility checklist with support of compliance
Internal agreement of members and observers of core selection team
Internal agreement of members and observers of core selection team
Desk-based review of submitted documents with initial scoring (QAC) and
then team review (minuted)
Desk-based review of submitted documents with initial scoring (QAC) and
then team review (minuted)
Invitations to 2nd screening issued & DD team formalisedInvitations to 2nd screening
issued & DD team formalised
Presentation of FIs to DD team in loco, scores reviewed &
minuted
Presentation of FIs to DD team in loco, scores reviewed &
minuted
Short-listed applicants undergo intensive 2 day
interview process
Short-listed applicants undergo intensive 2 day
interview process
Proposal presented to EIF Board for
approval
Proposal presented to EIF Board for
approval
Communication of decision
Communication of decision
Preparation of decision documents reviewed by
all depts.
Preparation of decision documents reviewed by
all depts.
1010
Selection process – other aspects
Reserve List process (in case transactions fail in negotiation)
Rules set in place in case of need
Rejection reasons explained upon request
Complaint procedure
EIB Group process published on website
Coordinated separately by EIF Compliance
Explanation of choice to mandator
Investment Board understanding/support/approval
Zero tolerance for political interference
Added Value of Process
Objectivisation of selection
Mitigation of politically motivated selection
1111
Conclusions & Lessons Learned
Conclusions
Principles must always be applied
Experience brings capability and confidence
Quality of decision-making process takes time
A selection decision is like a marriage
Lessons Learned
Remember this is a human process, not just numbers
Try to use failure as a learning opportunity
Quick/poor selection decisions can be very costly
Good decisions encourage private investors to participate
1212
Contact
European Investment Fund
96 boulevard Konrad Adenauer
L-2968 Luxembourg
Regional Business Development
Tel.: (+352) 42 66 88 1
Fax: (+352) 42 66 88 200
www.eif.org