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Debriefing and Access to Finance Plenary - Lang


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Debriefing and Access to Finance Plenary - Lang

  1. 1. Access to Finance for SMEs Restructuring Forum: The Impact of Financial Investors on Enterprises Brussels, 6 July 2010 Frank Lang KfW Liaison office to the EU
  2. 2. 60 years of KfW Financing with a public mission ● Promotional bank of the Federal Republic of Germany ● Founded in 1948 as Kreditanstalt für Wiederaufbau ● Shareholders: 80% Federal Republic, 20% federal states ● Headquarters: Frankfurt am Main Branches: Berlin and Bonn ● Representative offices: around 60 offices and representations worldwide ● Balance sheet total at end-2009: EUR 400 billion ● Around 4,200 employees (2009) ● Best rating: AAA/Aaa/AAA 2
  3. 3. KfW in comparison Balance sheet total vs commercial banks Balance sheet total vs promotional banks EUR in billions (2009) EUR in billions (2008) 400 2000 300 1500 200 1000 500 100 0 0 ) as ) ) (I) ) ) k W VB na B fW Z (D nk (F U an D tL ic (E P B hi fW Ba C K H er D es LB zb (C D B C m K C EI er W e B (A ch m D B ts om C D eu IA C D 3
  4. 4. A bank with a wide array of functions Domestic promotional business Promotion of Financing of SMEs, entrepreneurs, Promotion of municipal International Promotion of environmental and housing, education, infrastructure project and developing and climate protection infrastructure and projects and export finance transition countries business start-ups social development promotion in Europe 4
  5. 5. Neutrality through on-lending principle in loan business No branch network of our own Customer Customer's bank File loan application If approved, customer‘s with their regular bank bank forwards before start of investment application to KfW Private individuals Enterprises Enter into the loan refinances the loan Public agreement and at favourable institutions disburse the loan refinancing interest rates 5
  6. 6. Domestic promotional business Business area KfW Mittelstandsbank Target group Enterprises Financing products ● Classic promotional loans ● Mezzanine financing ● Private equity ● Advisory services 6
  7. 7. Domestic promotional business Business area KfW Mittelstandsbank Target group Enterprises Supported areas ● Access to finance (including growth) ● Business founding ● Innovation ● Environment and Climate protection ● Internationalisation 7
  8. 8. Financial Intermediaries The Network of Financial Institutions for SMEs (NEFI) ALMI Sweden AWS Austria BDB Bulgaria Finnvera Finland Hipoteku Banka Latvia HBOR Croatia ICO Spain KfW Germany KredEx Estonia UniCredit Italy MFB Hungary OSEO France SID Slovenia SNCI Luxembourg SZRB Slovakia 8
  9. 9. Access to Finance for SMEs The European Commission’s approach R is k c a p it a l D e b t f in a n c i n g & g u a r a n t e e s E a rly s ta g e s H i g h G r o w t h In n o v a t i v e M i c r o fi n a n c e S M E G u a ra n te e s - In t e ll e c t u a l p r o p e r t y S M E S c h e m e (G IF ) - Loan - T e c h n o lo g y t r a n s f e r - V C fu n d s - M i c ro c r e d i t - S e e d fi n a n c e • s e e d & s ta rt-u p R o u n d ta b le o f - E q u ity & m e z z a n in e - In v e s t m e n t r e a d i n e s s • e a r ly e x p a n s i o n s t a g e b a n k e rs & S M E s - S e c u r i t is a t io n - B u s in e s s a n g e l s B u s in e s s A n g e ls B e t t e r g o v e rn a n c e C a p a c i t y b u il d i n g P u b l ic s to c k m a rk e ts Enterprise’s revenue F o rm a l V e n tu re C a p ita l F u n d s B a n k lo a n s a n d g u a ra n te e s S e e d /e a rly s ta g e V C F u n d s B u s in e s s a n g e ls E n t r e p r e n e u r, f r ie n d s , f a m il y Pre-seed phase Seed phase S ta rt-u p p h a s e E m e r g in g g ro w th D e v e lo p m e n t V a lle y o f D e a t h E n t e r p r is e ’s d e v e lo p m e n t s t a g e H IG H E R R IS K L O W E R R IS K E U p o lic y d e v e lo p m e n t E U f in a n c ia l in s t r u m e n t s T h e f in a n c ia l e n v ir o n m e n t : E U p o lic ie s a n d f in a n c ia l in s t r u m e n t s u n d e r C IP 9
  10. 10. Access to Finance for SMEs Measures of finance from a national promotional bank – the KfW example Loans ● Business founding (KfW StartGeld) ● Business growth (KfW Unternehmerkredit) ● Safeguarding access to finance in the crisis (KfW Sonderprogramm) Mezzanine (subordinated loans) ● Business founding (ERP Kapital für Gründung) ● Business growth (KfW Kapital für Arbeit und Investitionen) ● Innovation (ERP Innovationsprogramm) Equity ● Venture Capital (ERP Startfonds) ● Equity for SMEs (ERP Beteiligungsprogramm; and others) Advice ● Business founding (Gründercoaching) ● Round Table ● others (e.g. networking; energy efficiency advice) Environment and Climate Protection ● Loans and advice for environment protection and energy efficiency measures ● Renewable Energies ● others (e.g. demonstration projects) 10
  11. 11. Access to Finance for SMEs Debt financing and guarantees guarantees EIB / EIF debt debt guarantees promotional debt commercial debt SME bank bank guarantees e.g. NEFI members debt equity capital markets 11
  12. 12. Access to Finance for SMEs Risk capital / VC funds EIF equity public equity equity VC fund SME investors e.g. NEFI members equity institutional investors 12
  13. 13. Access to Finance for SMEs Special example Turn around consulting ● SMEs that need a turn around owing to an unexpected development in their business although their market perspectives are good ● Grants for consulting services ● Supported by the European Social Fund ● Applicable only in case of a positive forecast for future business development ● Identification of weaknesses ● Setting up an action plan ● Implementation of measures 13
  14. 14. Access to Finance for SMEs Special example II KfW Special Programme (KfW Sonderprogramm) ● Part of the German federal government’s crisis response package ● Quick and flexible response due to the SME financing experience of the national promotional institution ● includes ● Investment capital and working capital ● SMEs and other enterprises ● Project finance 14
  15. 15. Cooperation of EU and national level to support SMEs Advantages and examples Combination of the EU and national level ● Leverage of national/regional/private funds ● Risk sharing EU and national level helps reaching more final beneficiaries ⇒Involvement of EU institutions guarantees a European added value National/regional level is crucial for the success of EU SME policies ● A “one size fits all approach” is not suitable for 27 different member states ● National/Regional institutions know their respective markets and clients ● National/Regional institutions have well-established financing programmes and distribution channels Examples ● KfW StartGeld Programme for business founders and young enterprises. ● KfW-StartGeld is supported by a guarantee funded under the EU Competitiveness and Innovation Framework Programme (CIP) ● Example from French OSEO: Range offering Guaranty + Mezzanine to help and co- finance Innovation, Investment and Internationalization to grow up SMEs © KfW • Thema der Präsentation • Ort • Datum 15
  16. 16. Key challenges for SME policy in the EU and best practice answers by national promotional institutions ● Climate protection EU 20 20 20 goals for climate protection ● ⇒ Strengthening the contribution of SMEs for climate protection, e.g. ERP Environmental and Energy Efficiency Programme ● Innovation ● EU innovation and research strategy plan ⇒ Financing programmes to support the innovation of SMEs, e.g. ERP Innovation Programme; KfW StartGeld ● Access to Finance ● EU recovery plan to safeguard access to finance for SMEs during and after crisis ⇒ special programmes for SMEs, e.g. KfW Sonderprogramm ● Internationalisation ● Enhancing the role of European SMEs in international trade ⇒ Financing foreign investments of SMEs; services for the internationalisation of SMEs © KfW • Thema der Präsentation • Ort • Datum 16
  17. 17. Supporting SMEs via cooperation of EU and national level: Some proposals from national promotional instutions EU 2020 strategy as a basis for the support of the competitiveness of SMEs ● Improving the general environment for SMEs ● Strengthening the internal market ● Adaptation of state aid measures ● Improving the access to finance ● Risk sharing approaches ● EU support for national financing programmes for SMEs ● Cooperation of European Commission, EIB and other long-term investors Special measures to support the internationalisation of SMEs ● Accompanying SMEs in their internationalisation process ● Training banks and investors (→ working with intermediaries: Training in fields where they don’t have experience: innovation, internationalisation, … ) © KfW • Thema der Präsentation • Ort • Datum 17
  18. 18. Thank you for your attention Frank Lang KfW Liaison Office to the EU Square de Meeûs 37 B – 1000 Brussels Tel.: ++32 2 2333851