prop · H703181 · 2020-06-10 00:00:00 — - better structural credit terms and higher credit spreads. Consequently, EIF resources are requires to be complemented with EUR 240m for 2020 and EUR 840m for 2021. Target rating of the Senior In the range of [iBaa2 / iA2]. It is planned that the product will be market conform. not be possible following consultation with DG COMP, an alternative State aid framework will be sought. EIF COVID-19 EQUITY RESPONSE MEASURE # 1: EXISTING FUNDS TOP-UP FACILITY (TUF) The long-term impact on SMEs and Mid-Caps supported by Venture Capital (VC) and () across the EU will depend on the length and severity of the However, a number of companies are already very strongly affected and will continue to be impacted in the short-term. to specifics of the VC/PE industry, these companies require dedicated and tailor-made equity-like support. TUF will be primarily used to support VC and PE funds in EIF’s portfolio which have limited or insufficient remaining undrawn capital to support SME and Mid-Cap companies in their investment portfolios. Specifically the products under TUF will contribute to: ∙Supporting financially sound existing portfolio companies experiencing short/mid- term liquidity issues combined with increased risk of insolvency; ∙Helping avoid portfolio companies having to sell off otherwise promising companies’ assets at depressed valuations to provide needed short-term liquidity; and ∙Ensuring stability and availability of follow-on capital for further growth of performing companies. TUF shall make available equity or hybrid debt equity funding to fund managers in or alongside their existing funds to support companies in their existing portfolios through TUF will be structured through two deployment modalities, which depending on the situation will be better fitted to achieve the Policy Objectives. ∙TUF 1 – vehicle top-ups: Such increased commitments to EIF portfolio funds are to be structured through side vehicles which shall invest in follow-on investments in existing portfolio companies. These increased commitments will expand the ability of the fund manager to perform follow-on investments and will be dedicated to supporting a subset of promising companies most in need of support (from one or multiple-generation funds managed by the fund manager). ∙TUF 2 – Preferred equity top-ups: To provide additional resources to EIF portfolio funds, EIF shall subscribe to a top-up on more senior terms relative to existing investors. The investment may entitle EIF to a liquidation priority (ie. will be reimbursed in advance of existing investors), carry a contractually agreed preferred return and potentially also a participation in the upside. The investment will carry a lower risk than existing investors, but also entitle EIF to a lower share of the upside. Eligible final recipients include SMEs, Small Mid-caps, and Mid-caps established or operating in the EU Member States. TUF is expected to finance predominantly portfolio companies: i) to overcome short and mid-term liquidity constrains resulting from loss of revenue, ii) to increase production capacity, and iii) to finance market or product development. In terms of stage, the facility is expected to focus more prominently on one or more of the stages listed below: ☒ Growth and expansion, including expansion through, when necessary, financing for acquisition of a business, replacement / transition capital for growth (excluding strategies intended for asset stripping). Final recipients across all sectors will be eligible, save for EIF restricted sectors. All EU Member States Primarily fund managers in EIF’s existing VC and PE portfolio that undertake long- term risk capital or tailored-debt investments in the form of equity, preferred equity, hybrid debt-equity Instruments, and other type of mezzanine financing. For TUF 1: 1.Maximum ticket to be set in line with fund’s performance grading 2.EIF will seek to promote the use of hybrid debt-equity instruments for investments in portfolio companies given their less-dilutive nature and ability to defer the valuation setting. Use of hybrid-debt instruments will provide for higher ranking of the resources invested through side vehicles in comparison to the typical equity financing provided by the main funds in the same underlying companies. 3.EIF will generally seek to participate in side vehicles match-funding at final recipient level between EIF commitment under TUF 1 on one side and the main fund plus third party investors on the other side. EIF can deviate from this rule depending on the availability of third-party investors, undrawn capital in the main fund, and available resources for matching. To prevent adverse selection by fund managers, EIF will ensure that following aspects are respected: Quality assets: follow-ons will be in quality portfolio companies that i) had demonstrated positive growth trend in the 2019 financial year with an expectation for further growth as of or ii) were not already underperforming before the crisis (financially or operationally); Pre-selection of portfolio companies: Financial Intermediaries have to provide upfront a list of portfolio companies that will benefit from follow-ons via the side vehicle, which will be pre-agreed at the time of the side vehicle set-up. Alignment of interests: EIF will seek to ensure strong alignment of interests with the Financial Intermediaries based on the T&Cs negotiated (among others, hurdle and team commitment). For TUF 2: ∙Maximum ticket size to be set subject to EIF internal risk scoring and asset coverage considerations ∙Preferred equity tranche return range to be set depending on asset coverage and EIF internal risk scoring ∙Minimum asset coverage range ∙Upside participation in distributions on top of preferred equity tranche return depending on risk profile of the individual operation Top-up commitments under TUF will be provided to fund managers on a no management fee basis. EIF will ensure adequate management of potential conflict of interests and alignment of interest with the existing investors and the Financial Intermediaries. From fund manager to EIF based on standard EIF reporting in line with similar indirect It is planned that the product will be market conform. Should this not be possible following consultation with DG COMP, an alternative State aid framework will be EIF COVID-19 EQUITY RESPONSE MEASURE # 2: MINIMUM & TARGET FUND SIZE FACILITY (MTS) Size Facility (MTS) MTS is aimed at supporting funds in EIF’s pipeline of target investments or funds in EIF’s existing investment portfolio that are likely to experience prolonged fundraising periods due to market uncertainty. The most impacted fund managers will likely be first-time or emerging teams that do not have yet a longstanding investor base and whose funds are perceived as more risky investment opportunities. In addition, depending on the length and severity of the COVID-19 crisis, relatively established teams could face similar difficulties, overall resulting in restricted availability of risk capital to support SME and Mid-Cap financing in the EU. The objective of this facility is to contribute to the availability of equity risk capital in the EU by selectively supporting funds to rapidly achieve a first closing and start executing their investment strategy, in effect reducing time-to-market for supporting their portfolios of SME and Mid-Cap investee companies. MTS shall act as a cornerstone investor by selectively taking increased stakes to support fund managers and making larger commitments than initially intended to funds (in some cases above ) in fund raising managed by first time, emerging, or established teams and bringing them closer to target fund closing size. Eligible final recipients include SMEs, Small Mid-caps, and Mid-caps established or operating in the EU Member States. In terms of stage, the facility is expected to focus more prominently on one or more of the stages listed below: ☒ Pre-seed / Seed ☒ Growth and expansion, including expansion through, when necessary, financing for acquisition of a business, replacement / transition capital for growth (excluding strategies intended for asset stripping). Final recipients across all sectors will be eligible, save for EIF restricted All EU Member States Closed-end investment fund or other investment vehicle, in any form, established or to be established, that undertakes long term risk capital or tailored-debt investments in the form of equity, preferred equity, hybrid debt-equity Instruments, other type of mezzanine financing, and/or debt financing. EIF will have the ability on a case-by-case basis to provide more than (subject to State Aid rules) of total commitments at first closing to facilitate quick deployment of resources and substantially reducing time-to-market. In line with EIF’s standard equity investment guidelines From fund manager to EIF based on standard EIF reporting in line with similar It is planned that the product will be market conform. Should this not be possible following consultation with DG COMP, an alternative State aid framework will be EIF COVID-19 EQUITY RESPONSE MEASURE # 3: REPLACING DEFAULTING LPS FACILITY (DLP) Replacing Defaulting LPs Facility (DLP) As a result of COVID-19, the likelihood of investors in VC and PE funds (Limited Partners or “LPs”) not honouring capital calls because of liquidity constraints is Investor defaults are expected to reduce availability of risk capital financing in the EU. Through DLP, EIF shall address the risks associated with LP defaults by: ∙ Replacing defaulting or likely to default LPs, thereby ensuring that PE and VC funds can complete the initially envisaged investment strategy in terms of number of portfolio companies (ensuring sufficient diversification) and capacity to do follow-ons; and ∙ Providing a strong signalling effect to market participants (e.g. banking institutions providing credit facilities, fund managers considering calling “precautionary” capital calls), thereby further reducing pressure on liquidity. EIF replacement of a defaulting LP will be structured as a secondary transaction in line with relevant provisions concerning LP defaults set out in the fund’s prevailing Eligible final recipients include SMEs, Small Mid-caps, Mid-caps established or operating in the EU Member States. In terms of stage, the facility is expected to be invested in final recipients predominantly in one the stages listed below: ☒Growth and expansion, including expansion through, when necessary, financing for acquisition of a business, replacement / transition capital for growth (excluding strategies intended for asset stripping). Final recipients across all sectors will be eligible, save for EIF restricted All EU Member States DLP will be deployed via funds in EIF’s VC and PE portfolio that undertake long term risk capital or tailored-debt investments in the form of equity, preferred equity, hybrid debt-equity Instruments, and other type of mezzanine financing. DLP will focus on defaulting or likely to default LPs (as notified to EIF by the fund managers in its existing portfolio) that can create damage to a fund’s shareholding structure and ultimate funding. Investments under DLP shall be originated with a view to continuing to provide meaningful risk-adjusted returns. In line with EIF’s guidelines for equity investments From fund manager to EIF based on standard EIF reporting in line with similar It is planned that the product will be market conform. Should this not be possible following consultation with DG COMP, an alternative State aid framework will be Response Measure #4: Turnaround/() Turnaround/() TSS shall aim to support SMEs and Mid-Caps in the EU with sustainable long-term operations facing financial shortages and/or operational distress resulting from the economic downturn linked to COVID-19. For most such companies, the distress is caused by temporary setbacks, whereas their long-term remain positive and business models sound. TSS will support the of funds with dedicated turnaround and special situations strategies that help keep distressed companies by providing them capital injections and operational restructuring, thereby saving them from bankruptcy, preserving jobs, and restarting growth. TSS shall support turnaround/special situation funds focussed on turnaround of distressed companies in the EU which have fundamentally sound business models. TSS shall be aimed at supporting company return to growth and job preservation. Eligible final recipients include SMEs, Small Mid-caps, Mid-caps established or operating in the EU Member States. Final recipients across all sectors will be eligible, save for EIF restricted All EU Member States Closed-end investment fund or other investment vehicle, in any form, established or to be established, that undertakes long term risk capital or tailored-debt investments in the form of equity, preferred equity, hybrid debt-equity Instruments, other type of mezzanine financing, and/or debt financing. EIF shall be involved early in the launch process of turnaround/special situation funds and invest with a significant participation at first closing. EIF shall have a critical role to play in the current fundraising situation. EIF shall target funds focussed on supporting final recipients by operational restructuring plans together with management and ensuring a fast and sustainable recovery, notably in relation to self-financing of operational needs and retaining employees over the long-term. TSS shall target turnaround/special situation funds focussing on a broad range of turnaround strategies, including: ∙ both primary and secondary acquisitions; and ∙ pre- or post-administration proceedings. TSS shall not support turnaround/special situation funds engaging in asset stripping. In line with EIF’s guidelines for equity investments. From fund manager to EIF based on standard EIF reporting in line with similar It is planned that the product will be market conform. Should this not be possible following consultation with DG COMP, an alternative State aid framework will be Response Measure #5: Facility (PCF) Facility (SLF) SLF shall aim to support companies in the EU facing persistent medium-term liquidity shortfalls resulting from the economic downturn linked to COVID-19. The main aim of the SLF is providing alternative sources of financing and widening the availability of non-bank financing to companies in the EU. Once seen as a relatively niche offering, European private credit is now a recognised source of financing which can tailored to meet the needs of SMEs and Mid-Caps and can be adapted to longer-term financing needs in light of the current market situation. SLF shall take equity stakes in selective loan funds providing onward debt and hybrid debt/equity financing Eligible final recipients include SMEs, Small Mid-caps, and Mid-caps established or operating in the EU Member States. Final recipients across all sectors will be eligible, save for EIF restricted All EU Member States Closed-end investment fund or other investment vehicle, in any form, established or to be established, that undertakes long term risk capital or tailored-debt investments in the form of non-distressed senior, subordinated or unitranche (secured or unsecured) financing. EIF shall be involved early in the launch process of the selective loan funds and invest with a significant participation at first closing. EIF shall have a critical role to play in the current fundraising situation. EIF shall target funds focussed on supporting final recipients by providing flexible senior debt financing solutions to SMEs, Small Mid-Caps and Mid-Caps in the form of non-distressed (a) senior or unitranche (secured or unsecured) loans/bonds, and (b) subordinated securities, quasi equity and hybrid debt instruments In addition, SLF is aimed to support primarily new financing, meaning financing flowing into final recipients for any purpose other than restructuring of an existing debt prior to its maturity. In line with EIF’s guidelines for equity investments. From fund manager to EIF based on standard EIF reporting in line with similar It is planned that the product will be market conform. Should this not be possible following consultation with DG COMP, an alternative State aid framework will be Partnerships Platform for Funds ARTICLE 1 DEFINITIONS AND INTERPRETATION ....................................................... ARTICLE 2 INTRODUCTION............................................................................................ Applicable policies, guidelines and principles................................................. Expected Results and Impact............................................................................... ARTICLE 3 THE PLATFORM ............................................................................. Legal Framework applicable to Contributions ................................................ Time schedule for Contributions..................................................................... Payment of Contributions and Third Party Financing..................................... Allocation, administration and management of Contributions Paid................ Change in status of Contributor...................................................................... Resources under management ............................................................................ Transfer of Resources .......................................................................................... 4.ARTCLE 4 FUNDS, ELIGIBLE OPERATIONS AND INSTRUMENTS UNDER THE Creation of a Fund ................................................................................................ Operations under the Funds................................................................................. ARTICLE 5 GOVERNANCE OF THE PLATFORM........................................................... Contributors’ Committees ..................................................................................... Members of the Partnerships Committees and the Contributors’ Committees .... Meetings and conferences ................................................................................... Agenda and documentation.................................................................................. Minutes and disclosures ....................................................................................... ARTICLE 6 APPROVAL PROCESS OF OPERATIONS .................................................. Design and implementation of operations ............................................................ Submission of operations for approval ................................................................. Operations below a defined threshold.................................................................. Operations above a defined threshold.................................................................. ARTICLE 7 FEES .............................................................................................................. ARTICLE 8 MANAGEMENT OF OUTSTANDING BALANCE .......................................... Investment of Fund Outstanding Balance ............................................................ Proceeds/losses from placement of Fund Outstanding Balance.......................... Investment tools and features .............................................................................. Liability arising from management of Fund Outstanding Balance........................ ARTICLE 9 ACCOUNTING AND REPORTING................................................................ Investment of Fund Outstanding Balance ...................................................... Reporting at the Fund level:............................................................................ Reporting at the Platform level ....................................................................... ARTICLE 10 AUDIT AND CONTROL ............................................................................... ARTICLE 11 DURATION................................................................................................... Termination of a Fund and of the Platform........................................................... Payment of the Fund Outstanding Balance upon termination of a Fund ............. ARTICLE 12 STANDARD OF CARE AND LIABILITY ....................................................... Standard of Care .................................................................................................. acting as for its own resources and operations.................................... acting in specific circumstances........................................................... Liability limited to gross negligence and wilful misconduct................................... Force majeure and disturbance of business......................................................... ARTICLE 13 AMENDMENTS AND ORDER OF PRECEDENCE..................................... Order of precedence............................................................................................. ARTICLE 14 SEVERABILITY............................................................................................ ARTICLE 15 DISPUTE RESOLUTION AND GOVERNING ..................................... Amicable resolution of disputes............................................................................ OF THIRD PARTY FINANCING.................................................................. (1)Considering the need to increase financial flows for sustainable development, and on t h e successful experience of (the “Bank” or the “EIB”) in combining its lending operations with instruments facilitating project preparation and implementation, through the Bank’s current portfolio of trust funds and blending facilities, the Bank has decided to set up an EIB-managed multi- region, multi-contributor and multi-sector Partnerships Platform for Funds (the “Platform”). The Platform is established also in anticipation of an increasing volume of funds that would require ensuring cost-efficiency of the related management activities. (2)The principal objective of the Platform is to strengthen operational efficiency by streamlining and standardising, to the extent feasible, processes and procedures, governance arrangements, fee calculation methodologies, and reporting standards applicable to the assets under the Bank’s management in respect of this Platform. (3)Operations under the Platform shall be organised through the contractual of individual pools of assets (each a “Fund” and collectively the “Funds”). shall arrange for Funds to be set up in collaboration with interested contributors, in order to address regional and sectoral priorities. These rules (the “Platform Rules”) shall apply to each new Fund to be set up under the Platform. Moreover, a Fund description shall be provided in a contribution agreement to be entered into between each contributor and the Bank to reflect specific objectives, requirements and eligibilities applicable to each Fund. (4)For the avoidance of doubt, despite the fact that the contractual relationship between the Bank and contributors may use terms such as “fund”, “trust” or “trust funds”, it is not the intention of the Bank to create, and these Platform Rules do not set up, any investment fund, trust or similar legal arrangement under the Platform. “Account” means, with respect to a Contribution Agreement, the bank account indicated by the Bank in that Contribution Agreement to which the relevant Contributor shall transfer the relevant Contribution in accordance with the terms of that Contribution Agreement. “Administrator” means the EIB in its capacity of the administrator of the Platform. “Article” means an article of these Platform Rules. “Business ” means a day during which the EIB is open for business at its seat in .