The EIB is injecting a third and final instalment of EUR 11.4 million(1) (FRF 75 million) into the joint"EIB-CDC Venture Capital Fund" set up in 1998 and managed by the Caisse des dépôts et consignations. Endowed, as a result, with FRF 300 million in all, this EIB Fund acts as an umbrella fund helping to strengthen the equity base of fledgling SMEs.
The EIB Fund operates in tandem with the Fonds Public pour le Capital-Risque (FPCR), an umbrella fund set up by the French Government in 1998, endowed with FRF 600 million and also managed by CDC. This process of fostering high-tech SMEs by assisting the creation and development of venture capital teams is proving to be a resounding success.
This joint operation by the EIB Fund and FPCR (divided as to one third and two thirds respectively between the EIB Fund and FPCR) is boosting the stock of private-sector capital available on the venture capital market through its leverage effect. The two umbrella funds take up holdings, on the same terms as private-sector investors, in venture capital funds, with a majority of private interests, deploying their resources in support of innovative new companies selected in accordance with market practice after analysis of their industrial, commercial and financial prospects. Hence, the two funds do not invest directly in enterprises, but rely on the expertise of the teams managing the funds which they support.
As at 31 December 1999, the EIB Fund-FPCR joint initiative had given rise to commitments totalling FRF 625 million in favour of 15 Fonds Communs de Placement à Risques (FCPRs), which should be able to mobilise more than FRF 4.5 billion for the purpose of financing mainly innovative French enterprises less than seven years old.
The beneficiary FCPRs are national (FRF 300 to 800 million) or regional (FRF 100 to 200 million) funds. A number of these are managed by newly-formed teams.
The FCPRs financed have invested nearly FRF 828 million in 130 enterprises with a total market valuation exceeding FRF 10 billion: 39% of which in on-line services and e-commerce, 31% in IT and software companies, 19% in the biotechnology sector and 11% in electronics and semi-conductor manufacturing businesses.
The EIB's initiative to promote venture capital facilities in Europe was formulated in response to the Amsterdam European Council's resolution on growth and employment (1997) and confirmed by the Cologne European Council (1999). Its aim is to foster innovative and high-tech SMEs and those with strong growth potential. In France, besides the EIB-CDC fund, the Bank has concluded a contract for EUR 15 million (FRF 100 million) with SOFARIS (a French company guaranteeing finance for SMEs which manages the National Guarantee Fund for Technological Development - FDT), serving to guarantee equity operations mounted by venture capital funds in support of innovative SMEs. The EIB has also set up the European Technology Facility (ETF), endowed with EUR 250 million and managed by the European Investment Fund (EIF), whose purpose is to support venture capital funds specialising in the provision of equity finance for innovative companies across the EU Member States. By the end of 1999, the ETF had committed EUR 86 million in 19 equity participations, including EUR 20 million in five funds in France (Auriga Ventures I, Banexi Ventures II, Galiléo II, Sofinnova Capital III, and SPEF Pre IPO European Investment Fund).
(1) EUR 1 = 6.55957 FRF; 0.621700 GBP.