Brussels, 19 April 2018

The JEREMIE Extremadura Instrument / SPAIN

César MORCILLODirector

Office of Extremadura in Brussels

Main features

- 1/17 regions of Spain

- 41,635 km2 (> Belgium)

- 1,1 million inhabitants

- 26 inhab / km2

- GDP pc: 16 028 euros

Key sectors

- Agriculture

- Energy

- Tourism

- Health care

- ICTs

ESIF 2014-2020

3 billion euros

- ERDF: 1.485 billion euros

- ESF: 591 Meuros

- EAFRD: 891 Meuros

Extremadura / SPAIN

Background: who?

Background: why?

• New reality:

• Need to address the SMEs credit demand, at a time of low liquidity

and high restriction of access to financial markets

1

• New support:

• Less grantsmore financial resources more beneficiaries

• Promote the culture of entrepreneurship more risks

2

• New capacity building:

• New procedures and new framework adaptation

• New legal instruments overcome the traditional approach

3

Fund: what?

• Financial instrument. JEREMIE Extremadura

• EU funds from Extremadura ERDF OP 2007-20131

• Budget. Allocation of 15.7 Meuros absorbed in 2 months

• 29.95 Meuros = 16.9M ERDF + 2M public + 11.05M private2

• Thematic focus: loans for growth & innovation projects

• Final recipients. SMEs & self-employed3

Set-up and implementation: how?

Interest of new forms of support to SMEs

Evaluation study of SMEs access to finance

Uncertaintyabout theviability

Difficulty to fully understand the process

Good absorptionlevels of ERDF OP 2007-2013

Evidence about the "market failures".

Decision to set up a holding fund

Selection of the Holding Fund manager

Signature of the fundingagreement

Set-up and implementation: how?

Enlargement Addendum to thefunding agreement

Addendum to theoperationalagreement

Constitution of thefinal portfolio: 29.95 Meuros

Initial public allocation (15.7 Meuros)

Set-up and implementation: how?

Set-up and implementation: how?

Main results

- 40,490,472.14 euros lent to SMEs through loans.

- 135.2%: utilisation rate.

- 1,022 loan operations from 1,000 to 1,000,000 euros.

- 39,619: average loan size.

- Range of loan maturity: between 1 to 10 years.

- Average loan maturity: 52 months.

- 934 SMEs obtained loans.

- 854 micro, 71 small and 9 medium enterprises.

- 43% of the portfolio innovative SMEs (more than

doubling the initially agreed 20%).

- An average of 4 employees per final recipient.

- 63 sectors beneficiaries.

- The top three sectors of Extremadura’s economy (food

manufacturers, wholesale trade and retail trade) constituted

approximately 46% of the portfolio.

Lessons learned: success factors

JEREMIE Extremadura was launched at a time of great weakness of financial

markets and extreme need for SMEs.

The financing of working capital needs enabled the continuation of economically

viable businesses.

The selection of the European Investment Fund as Holding Fund manager has

guaranteed the necessary professionalism and knowledge.

Lessons learned: challenges

• The regional government had previously supported business

development & innovation mostly through grants1

• The lack of knowledge about financial instruments at the

beginning of the process was a handicap2

• Change of mindset at the political and technical levels to

adapt to the new framework3

Lessons learned: outlook

The crisis was a “test

bench” for the

development of new

financial instruments in the

future.

Financial instruments are

complementary to grants.

They don’t overlap.

Financial instruments in

place should be flexible

enough to adapt to a

changing market.

Clear regulatory rules,

supported by interpretative

documents based on

experience and the results

of audits carried out, are

crucial to:

- Facilitate the management

tasks of financial

intermediaries.

- Reduce the eligibility

problems of certain projects.

Thank you

www.fi-compass.eu