Philippe de Fontaine Vive, Vice President of the European Investment Bank (EIB) in charge of the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) today visited Beirut to prepare FEMIP's contribution to the International Conference for support to Lebanon to be held in Paris on 25 January. He signed a commitment agreement that will help create a new investment company, Byblos Ventures, dedicated mainly to Small & Medium sized Enterprises (SMEs) in Lebanon.
The commitment is for a FEMIP participation of up to EUR 7.5 million in Byblos Ventures s.a.l. (Holding), an investment company for the Lebanese private sector and, to a limited extent, for companies located in Jordan, Syria, and Egypt. Byblos Ventures will support small & medium sized equity and quasi-equity investments. The Byblos Bank group and other institutional investors will co-invest alongside FEMIP, allowing the company to reach its initial target size of USD 20 million (EUR 15 million) in the next few months.
Byblos Ventures brings together the financing and know-how of FEMIP in terms of private sector financing in Mediterranean Partner Countries with the strength of a prime Lebanese banking partner with a successful track record in SME financing.
EIB's participation comes together with technical assistance to encourage the application of best industry practice and to help attract other international investors.
This operation is part of FEMIP's strategy of giving priority to private sector financing in its operations. It follows the signature in 2006 of a private equity fund based in Beirut and complements the EUR 110 million of long-term loans provided to Lebanese SMEs via the Lebanese banking sector under three lines of credit.
In addition, FEMIP's substantial support for private sector activity in Lebanon will be further stepped up. A new EUR 60 million line of credit will provide long term financing for SME investment projects in industry, agro-industry, IT, services, health and education. It will be channelled through 14 top-tier banks in Lebanon. On top of this, last month EIB approved a special EUR 100 million facility that targets the reconstruction and recovery of SMEs whose businesses were affected by the recent conflict. This facility will enjoy special financing conditions tailored to the needs of damaged firms and is expected to be signed shortly.
The EIB will play an important role in joining the efforts of the international community to assist the Lebanese government's reconstruction, recovery and reform set out in the programme for the upcoming Paris Conference on support for Lebanon. EIB involvement aims at supporting structural reform, particularly for investments in the power sector, and in major infrastructure projects - transport and energy - especially those with private sector participation.
Mr. De Fontaine Vive commented "As a longstanding partner of Lebanon, with financial cooperation going back 30 years, the European Investment Bank stands ready to continue its commitment to the country at this difficult time by supporting the reconstruction and recovery process and underpinning the Lebanese government's reform agenda. Byblos Ventures will contribute to ease financing constraints that exist for promising private-sector small and medium sized enterprises (SMEs). Providing risk capital will also help develop an important missing component of the local financial sector."
The European Investment Bank (EIB), established in 1958 by the Treaty of Rome, finances capital investment projects that further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union.
The Facility for Euro-Mediterranean Investment and Partnership (FEMIP) is the culmination of a partnership between the European Union and its Mediterranean neighbours that goes back more than thirty years and was intensified in the 1990s in support of the Barcelona Process. The Facility aims to help the Mediterranean partner countries meet the challenges of economic and social modernisation and enhancedthe framework of the EU's European Neighbourhood Policy.
FEMIP gives priority to financing private sector ventures, with the dual aim of liberalising the economies of the Mediterranean partner countries and developing their potential in the run-up to the creation of a customs union between those countries and the EU in 2010. It focuses on foreign direct investment and local private sector initiatives as well as social-sector projects, particularly in the fields of health, education and environmental protection, which are fundamental to achieving social stability and encouraging productive investment.
FEMIP operations are managed by the EIB, which deploys three types of product: loans, investment capital (equity and quasi-equity) and technical assistance.
Investment capital activities are financed from the European Community budget (EUR 200 million over the period 2001-2006) and by the FEMIP Trust Fund, which was set up in December 2004 (EUR 33.5 million).
FEMIP has granted technical assistance to Byblos Ventures from two existing FEMIP technical assistance programmes, funded by the European Community budget: (i) the first, between Nov 2004 to May 2006 and (ii) the second, to be launched in the near future for an 18-month period.