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JEREMIE

At the beginning of 2006, the EC (Directorate-General for Regional Policy) and the EIF joined forces to prepare the ground for this new initiative. The EIF set up a JERE-MIE team whose objectives were threefold:

•• Assessing the demand and supply for financial engi-neering and identifying SME finance market failures in regions and Member States in JEREMIE evaluation studies, so-called “gap analyses”;

•• Assisting Managing Authorities in the programming phase of the cohesion policy;

•• Advising the Managing Authorities on the practical arrangements for implementing a JEREMIE Holding Fund.

The EIF has produced 55 gap analyses for EU Member States and regions interested in JEREMIE, through a standard “evaluation”methodology.

The European Commission has published the Execu-tive Summaries of the JEREMIE evaluation studies which can be found on: http://ec.europa.eu/regional_ policy/funds/2007/jjj/jeremie_en.htm.

What are the benefits of using JEREMIE?

The principal benefits are:

•• Flexibility: Contributions from the Operational Pro-grammes to the JEREMIE Holding Fund will be eligi-ble for interim up-front payment by the European Regional Development Fund and the European Social Fund 2 giving Managing Authorities more flexi-bility in allocating these resources; Structural Fund contributions to the Holding Funds must be invested in SMEs by 2015;

•• Benefits of a portfolio approach: The Holding Fund will be able to re-allocate the resources to products in a flexible way, depending on the actual demand over time. The umbrella-fund approach will allow a diversification of risks and expected returns;

•• Recycling of funds: The Holding Fund is of a revolv-ing nature, receiving repayments from the financial intermediaries for further investments in the SME sector. This makes SME support via EU Structural Funds sustainable compared to using the pure grant approach;

•• Leverage: A significant advantage of JEREMIE­ is its potential ability to engage the financial sector, ­either at the Holding Fund level, with additional capital from financial institutions, and/or at the level of the financial instruments through public/private co-financing, e.g. in coopera­tion with the EIB;

•• The EIF’s expertise as a Holding Fund manager can be of particular added value in the less-developed regions/Member States, where there is a need for capacity-building initiatives and transfer of know-how between local institutions and the EIF;

•• In those regions where JEREMIE is managed by another body, the EIF can also be involved as an adviser , for a wide range of services such as due diligence/second opinions, setting-up of financial vehicles, etc.

The JEREMIE initiative provides regions and Member States with the possibility of benefiting from a flexible, efficient, “visible” and revolving financial platform for SMEs, through a long-term partnership with their local financial institutions.

2   The EU Structural Funds from which national and regional Managing Authorities can allocate money to a JEREMIE Holding Fund.

Preparing the ground for JEREMIE: the evaluation phase

Potential EIF products for JEREMIE

Pre-seed Seed Start-up Emerging Growth Development

SME Development Stages

HIGHER RISK LOWER RISK

Guarantees & Credit Enhancement Private Equity (formal VC and mezzanine) Funded Risk Sharing products Venture Capital Seed & Early Stage

Microcredit/loans Business Angel funding Technology Transfer