In Bulgaria, the JEREMIE Holding Fund (JHF) is financed by the European Regional Development Fund (ERDF) and co-financed by 15% by the State Budget within the framework of the Operational Programme (OP) “Development of the Competitiveness of the Bulgarian Economy 2007 – 2013”. Under this OP, the Ministry of Economy, Energy and Tourism (MEET), has allocated contributions under the Priority Axis 3, including a national contribution, equal to EUR 199 million for the implementation of the JEREMIE Initiative aiming to improve the access to finance for Small and Medium-sized Enterprises (SMEs) through various financial engineering instruments.
On April 29, 2010, the Government of the Republic of Bulgaria, through the MEET, and the European Investment Fund (EIF) signed the Amended and Restated Funding and Framework Agreements (Amended Agreements) structuring the implementation of the JEREMIE Initiative in Bulgaria.
Part of the Amended Agreements is the investment strategy of the JEREMIE Initiative in Bulgaria. It envisages a balanced mix of equity and debt instruments to address the existing major gaps between supply and demand of financial engineering instruments. On the equity side, the initiative has developed a rich portfolio of instruments addressing all the stages of the life cycle of an enterprise – the Entrepreneurship Acceleration and Seed Financing Instrument for the enterprises in their pre-seed and seed stages, the Risk Capital Fund for the enterprises in their early expansion stages, as well as Growth and Mezzanine Funds targeted at more mature, established companies seeking growth and expansion opportunities.
On the debt side, the initiative supports SMEs through a First Loss Portfolio Guarantee instrument aimed at decreasing the collateral levels and interest rates of loans to SMEs. Due to the leveraged structure of the Financial Instruments, in addition to the public funds under JEREMIE (EUR 199 million), it is estimated that an aggregate of EUR 563 million will be directed towards supporting Bulgarian SMEs in the form of equity investments and loans, thus providing Bulgarian SMEs with EUR 2.83 for each EUR 1 of public funding available.
Calls for expression of interest for implementation of the following financial instruments were launched in 2010 and 2011:
- Risk Capital Fund – EUR 30 million (70% JHF contribution)
- Growth Capital Fund – EUR 60 million (50% JHF contribution)
- Mezzanine Fund – EUR 60 million (50% JHF contribution)
- First Loss Portfolio Guarantee Instrument – EUR 392 million (78.4 million JHF contribution)
- Entrepreneurship Acceleration and Seed Financing Instrument – EUR 21 million (100% JHF contribution)