Graham Cope Head of Region Brussels, 30 November 2010 Selection Process of a Financial Intermediary.

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