The European Investment Bank, the European Union's long-term financing institution has concluded a EUR 50 million (1)(GB£ 33 million) agreement with Merlin European Biosciences Fund to provide equity capital for leading European bioscience companies. The arrangements were concluded in London today between EIB President Sir Brian Unwin and the Chairman of Merlin Biosciences, Dr Chris Evans. The Merlin Fund will be managed and advised by Merlin Biosciences, a leading European capital venture group specialising in investing in bioscience enterprises.

EIB President Sir Brian Unwin, said: "The bioscience sector is of strategic importance in helping to underpin European competitiveness. The new biotechnology industry is growing rapidly in Europe and has great potential for creating growth and employment. This new agreement reinforces the European Investment Bank's expanding programme to support the European venture capital industry as a vital source of future growth and jobs."

The EIB and Westdeutsche Landesbank (WestLB) will be cornerstone investors in the Fund, which has a funding target of EUR 250 million (GB£ 160 million). The EIB is sharing risk and return in the fund on the same basis as other investors, and is making its investment available in two tranches: the first of EUR 37.5 million followed by the balance of EUR 12.5 million once the Fund reaches EUR 187.5 million.

The Fund will focus on taking minority equity or equity related stakes in some 20-35 unlisted ventures with proven track records, primarily in mid-stage development. Typical investments will be in the EUR 7.5 - 12 million (GB£ 5-8 million) range in ventures in pharmaceutical, healthcare, food, beverage and chemical process industries.

The European Investment Bank, the European Union's long-term lending institution, finances capital investment furthering EU integration, in particular: regional development; trans-European networks in transport, telecoms and energy; industrial competitiveness and integration; SMEs; environmental protection; and energy security. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the Member States, the EIB raises its funds on capital markets (AAA issuer). Sir Brian Unwin is the first British President of the institution and assumed office in 1993. In 1998, the EIB lent some EUR 30 billion, of which £2 billion in the UK.The EIB provides risk capital for SME venture capital industry under a special programme, set up following the European Council's resolution on growth and employment in Amsterdam in June 1997 which asked the Bank to step up lending for investment to help job-creation and to stimulate the economy. The EIB's Amsterdam Special Action programme (ASAP) programme also includes new lending for education, health and urban renewal; and expansion of financing for trans-European networks and other major infrastructure schemes. The EIB may draw up to ECU 2 billion from its reserves to cover risk capital financing under the SME Window.

(1) 1 EUR= 0.647500 GBP, 0.77564 IEP.