The European Investment Fund (EIF) and Austria Wirtschaftsservice (AWS) have signed the first counter-guarantee agreement in Europe with a promotional institution to support lending to innovative small and medium-sized enterprises (SMEs) as well as Small MidCaps under an initiative funded by the European Commission.

The new agreement signed under the Risk Sharing Instrument (RSI) initiative allows AWS, an EIF shareholder, to provide guarantees to banks financing innovative companies in Austria enhancing access to a total of EUR 29m of debt financing over the next two years with the support of the 50% counter-guarantee offered by EIF. This enables AWS to provide guarantees to banks financing innovative companies which in turn give them access to additional financing at favourable conditions.

This is the first counter-guarantee agreement in Europe with a promotional institution signed under RSI. It is the second RSI agreement in Austria and the 22^nd in Europe so far, bringing the total loan finance available to innovative businesses across the EU under this initiative to well above EUR 2bn.

Commenting on the signature in Vienna, EIF Chief Executive, Richard Pelly said: “I am very pleased to be signing this Risk Sharing Instrument (RSI), under a DG Research and Innovation FP7 programme in support of innovative small and medium sized enterprises with AWS. Today, we are celebrating the 15th anniversary of the start of the cooperation between EIF and AWS and the relationship goes from strength to strength. As an example of this, I am also pleased that our joint business angel initiative is taking off - the aws Business Angel Fonds. Co-investments with selected Business Angels, will catalyse up to EUR 45m for early stage financing. A first co-investment with Mr Herbert Gartner, the former co-founder of SensorDynamics, is in the pipeline, subject to final contractual negotiations to be completed in the coming weeks.”

The Minister of Economy Reinhold Mitterlehner explained: “We thereby facilitate the financing of company founders as well as small and medium-sized enterprises in an economically challenging environment. This new initiative secures investments, growth and employment in Austria. In view of the higher regulatory capital requirements for banks, aws-instruments – in particular aws-guarantees – are gaining more and more in importance. Therefore international cooperations are of particular significance with regard to guarantees.”

Bernhard Sagmeister, Managing Director of aws, added: It is especially important for us to make our instruments more attractive through the combination with European funds, and we are pleased about the intense cooperation with the EIF, which we intend strengthening even more in future. It is therefore that aws has - for strategic reasons - acquired a share.”

The aim of the RSI Facility is to encourage banks to lend to SMEs and small mid-caps with fewer than 500 employees in need of investment financing and/or operating capital to support research, development and innovation activities, with EU financial support. Banks are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe. This facility targets enterprises not covered by the existing counter-guarantee under the CIP programme signed between EIF and AWS.

About Risk-Sharing Instrument (RSI) under FP7

RSI is a pilot guarantee scheme which supports the financing of R&D and/or innovation driven SMEs and Small Mid-Caps. The RSI is a joint initiative of the EIF, the European Investment Bank (EIB) and the European Commission. It is supported by the European Union under the Seventh Framework Programme for Research and Technological Development (FP7) and uses EIF's risk-taking capacity. It is part of, and complements, the existing Risk Sharing Finance Facility (RSFF), managed by the EIB.

Under this facility, the European Investment Fund (EIF) is, in return for a fee, providing guarantees to banks and leasing companies that lend to SMEs and Small Mid-Caps. The guarantee covers, upon default, 50% of the outstanding amount of each loan. Some 10 or so banks are expected to be involved in the pilot phase, allowing the RSI to reach up to 1000 beneficiaries with a total loan volume of up to €1.0 billion.

The call is open to financial or credit institutions, established and operating in the EU and/or countries associated to FP7, including, Iceland, Liechtenstein, and Norway, Switzerland, Israel, Turkey, Croatia, the former Yugoslav Republic of Macedonia, Serbia, Albania, Montenegro, Bosnia & Herzegovina, the Faroe Islands and Moldova.

About the EIF

EIF's central mission is to support Europe's micro, small and medium-sized businesses by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 6.9bn at end 2012. With investments in over 435 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 4.7bn in close to 255 operations at end 2012, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

About AWS

Austria Wirtschaftsservice GmbH (aws) is the Austrian government promotional bank. aws offers Austrian companies financial assistance in the form of loans, guarantees, grants and/or equity as well as consultancy services from the start-up to expansion phase.

Press contacts:

EIF: David Yormesor, Tel.: +352 42 66 88 346, e-mail: d.yormesor@eif.org
AWS: Matthias Bischof, Tel.: +43 664 4299143, e-mail: m.bischof@awsg.at

HIGHLIGHTS

Risk Sharing Instrument (RSI)