December 8 (SeeNews) - The European Investment Fund plans to launch a 30 million euro ($44.3 million) venture capital fund to address small and medium-sized enterprises (SMEs) in Bulgaria in the first quarter of 2010, a senior EIF official said on Tuesday.
The fund will be the first step under the European initiative JEREMIE for the country worth 200 million euro, George Giakoumakis, regional business development manager with EIF, told the Private Equity in Bulgaria: The Year Ahead conference (www.bulgariaprivateequity.com) held in Sofia.
Before setting up the equity financing fund, the EIF will set up a holding company, which will be a special purpose vehicle to manage the JEREMIE funds, Giakoumakis said. The holding structure is due to be set next January.
The venture capital fund will target only SMEs which are at an expansion or pre-expansion stage of development and the size of the investment should be 1.5 million euro minimum per investee per 12 months. The fund will provide up to 70% of the needed capital and company managers will cover for the remainder.
At a later stage, EIB plans to set up growth capital fund and mezzanine fund to address more mature companies, Giakoumakis said and added that Bulgaria's economy ministry is to adopt a plan how to spend funds coming under JEREMIE.
Last month, Deputy Minsiter of Economy, Energy and Tourism Evgeni Angelov said that target of the funds will be equity financing of light and heavy industry, IT and communication companies.
JEREMIE which stands for Joint European Resources for Micro to Medium Enterprises, is an initiative of the European Commission, the EIF and the European Investment Bank designed to enhance financing to SMEs. JEREMIE’s resources are mainly derived from EU Structural Funds issued by the European Commission to EU member states for SMEs.
The EIF (www.eif.org) is the European Union's arm for SMEs financing. The fund supports SMEs via local financial institutions providing equity instruments through venture capital, growth and lower mid-market funds and private equity, to improve the availability of risk finance to high growth and innovative SMEs, and guarantees and credit enhancement through securitisation, to financial institutions such as banks and guarantee institutions, to improve their lending capacity and the availability and terms of debt they can offer to beneficiary SMEs.
($ = 0.6776 euro)