Under its Amsterdam Special Action Programme (ASAP) designed to bolster growth and employment in Europe, the European Investment Bank (EIB), the European Union's financing institution, is carrying out its second operation in France intended to strengthen the capital base of innovative SMEs.

To this end, the EIB is entrusting management of a fund endowed with FRF 300 million (around ECU 45 million)(1) to Caisse des Dépôts et Consignations (CDC), which has a proven track record in the field of equity operations in support of SMEs and also manages a substantial venture capital portfolio.

This EIB venture capital fund will complement the Fonds Public pour le Capital-Risque (FPCR), also managed by Caisse des Dépôts et Consignations (CDC) and set up by the French Government with part of the proceeds (FRF 600 million) of privatisation of France Télécom. The aim of this operation is to bring together public and private-sector capital in venture capital funds with a majority of private interests, managed by experienced professionals and investing in accordance with the standards and customary profitability requirements of corporate investors.

The EIB fund will operate in tandem with the FPCR, as to 50% of the latter's financing. Its aim will be to provide private investors in the venture capital market with additional leverage by boosting their financing capacity. This umbrella fund will not invest directly in innovative enterprises but will take up holdings, under the same conditions as private investors, in venture capital funds. These funds, with a majority of private investors, will deploy their resources in support of new innovative companies selected in accordance with market practices after analysis of their industrial, commercial and financial prospects.

This joint initiative by the FPCR and EIB fund is expected to help increase significantly the stock of venture capital available in France by contributing to the funding of equity operations worth FRF 4 billion to FRF 6 billion in favour of innovative or high-tech SMEs.

The contractual agreements relating to creation of the EIB fund were signed in Paris on 4 December.

This operation follows on from the FRF 100 million made available by the EIB to SOFARIS on 12 March for guaranteeing equity operations carried out by venture capital funds in support of innovative SMEs, an initiative which will serve to guarantee equity participations in SMEs worth nearly FRF 2  billion over the period 1998-2000.

The EIB set up the Amsterdam Special Action Programme in mid-1997 in response to the Amsterdam European Council's Resolution on Growth and Employment of June 1997. The purpose of ASAP, which will last three years, is to direct a substantial proportion of EIB lending towards projects in labour-intensive sectors (innovative SMEs, education, health, urban renewal), as well as to bolster the Bank's activity in the fields of environmental protection and trans-European networks.ASAP has been fully operational Europe-wide for a year:

• ECU 490 million approved for setting upsome twenty venture capital operationsconcerning 11 EU countries, designed to strengthen the capital base of innovative SMEs, including, in France, the present operation and that involving SOFARIS;
• ECU 125 million made available for management by the European Investment Fund (EIF) for creation of theEuropean Technology Facility (ETF), an EU-wide umbrella fund which acquires participations in venture capital funds or companies specialising in providing equity finance for innovative SMEs. To date, the ETF has invested ECU 18.5 million in five venture capital funds in France, including one specialising in financing SMEs preparing for their stock market launch;
• ECU 2.9 billion approved for financing 23 projects or programmes in the fields of health andeducationconcerning 14 EU countries, including, in France, funding for school infrastructure on the Island of Réunion and a global loan to Crédit Local de France for financing medium-scale schemes;
• ECU 3.8 billion approved for financing 24urban renewalprojects or programmes located in 9 EU countries, including, in France, a global loan to Crédit Local de France for financing medium-scale schemes, inter alia in the field of social housing;
• ECU 1.3 billion approved for some ten projects or programmes in the field of environmental protection, including, in France, a global loan to Crédit Agricole for financing schemes undertaken by SMEs in the area covered by the Agence de l'eau Seine-Normandie, and funding for waste processing in the Greater Chartres area.

Overall, ASAP is designed to increase the volume of EIB lending in these sectors by some ECU 10 billion over the period 1997-2000.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 September 1998, when ECU 1 = FRF 6.58.