Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Financial Engineering Instruments

5 December, 2012

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Current implementation statusProgramme/ mil. LVL Available finance Contracts signed Paid-out Still available

31.10.2012. EU fundsPublic finance

TotalNumber

of projects

EU funds Total EU funds Total EU funds Total

2.2.1.1.activity                    

FRS* 4,92 0,49 10,82 33 4,92 10,82 4,46 9,79    Venture capital 12,79 1,27 21,08 8 3,28 5,41 3,22 5,31 9,51 15,67

Seed capital fund 1,92 0,19 2,11 9 0,6 0,65 0,47 0,52 1,32 1,46

Start-up capital fund 2,58 0,25 4,23 2 0,34 0,56 0,3 0,49 2,24 3,67

Total contracted 22,21 2,2 38,24   9,14 17,44 8,45 16,11 13,07 20,8

Not contracted   39,89                2.2.1.3.activity                    

Credit & export guarantees 20 0 20 293+99 73,66+6,34 73,66+6,34      0,00**  0,00**

2.2.1.4.1.activity                    

Loans 38,39 4,91 58,5 57 29,48 44,92 27,75 42,27 8,91 13,58

2.2.1.4.2.activity                    

Mezzanine 10,67 7,07 17,74 2 0,6 1,01 0,27 0,45 10,07 16,73

1.3.1.2.activity (ESF)                    

Start-up loans + grants 12,17 2,15 23,06 779 6,25 12,16 5,62 10,98 5,92 10,9

*Programm finished on 26 September, 2012

**Amount of guarantees need to issue to reach multiplier of 4

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

97% of final recipients in all activities are SMEs

Additional resources at SME level:2.2.1.3.activity more than 180 mil. LVL issued in loans due to guarantees

2.2.1.4.1.activity at least 25% of loan amount must be added to the project

by company

SME

3

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

2.2.1.3.activity 9 credit guarantees, 0,58 mil. LVL (0,78% from total) 2 export credit guarantees, 0,047 mil. LVL (0,74% from

total)

2.2.1.4.1.activity 6 loans with delayed payments of 90 days in amount of

1,16 mil. LVL (3% from total) Recovery process for 2 loans in amount of 1,18 mil. LVL (3%

from total)

Non-performing investments

4

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Agreements with intermediaries foresees that revolving resources must be used for similar purposes

After implementation responsible bodies will specifically decide on further use of revolving resources

Exit strategy

5

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Growth capital fund to provide venture capital finance for growth and expansion of companies, improvement of venture capital market in Latvia

Micro loan fund to facilitate access to micro loans for Latvian micro and small enterprises via wider network of financial intermediaries

Accelerator funding to improve availability of finance for early stage companies in Latvia

Further activities

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Market gaps (1)

development stages

businessidea start-up early stage Expansion

growth Maturity

Finance

Entrepreneur, family, friends, grants, seed capital funds

Venture capital funds

Commercial banks(loans, leasing, factoring)

Private investors(business angels)

Subordinated debt(mezzanine)

The earlier the stage, the less developed

private market

LowRiskHigh

Profi

tabi

lity

Hig

hLo

w

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Micro and small companies access to finance High administrative costs for small investments, unstable cash flow, lack of collateral

Newly created companies access to finance Unstable cash flow, high business risk, lack of collateral

Export oriented, innovative and technological companies access to finance High business risk, hard to evaluate, specific project analysis, specific collaterals,

unpredictable export market

Export risk insurance Limited possibility to control business and political risks in export markets

Innovative and hi-tech product development High business risk, information asymmetry, specific analysis, necessary large amounts of

working capital

Equity and quasi-equity instruments Specific analysis required, informationn asymmetry, high business risk, overleveraged

Lack of collateral, illiquid collateral

Market gaps (2)

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

LGA has attracted employee from EIF

Professional Board of LGA (new board member attracted)

Tender completed and agreement on audit signed in November 2012

Final report of LGA capacity assessment sent to EC by first quarter 2013

Capacity of Latvian Guarantee Agency

Latvijas Republikas

Ekonomikas ministrijaMinistry of EconomicsRepublic of Latvia

Thank you!

Adress: Brīvības iela 55, Rīga, LV-1519Phone: 67013101Fax: 67280882E-mail: pasts@em.gov.lv Web: www.em.gov.lv Twitter: @EM_gov_lv, @siltinamYoutube: http://www.youtube.com/ekonomikasministrija