Bulgarian Parliament Ratifies Launch of EU's JEREMIE Initiative

Small and medium-sized Bulgarian businesses will benefit from the EUR 199 M provided by the newly approved by the Bulgarian government JEREMIE initiative. File Photo

Bulgaria's Parliament ratified Wednesday the agreement between Bulgaria and the European Investment Fund to apply the so-called JEREMIE initiative.

JEREMIE, Joint European Resources for Micro to medium Enterprises, is an initiative of the European Commission (Operational Program “Sustainable Development and Competitiveness” ) together with the European Investment Bank (EIB) and the European Investment Fund (EIF) in order to promote increased access to finance for the development of micro, small and medium-sized enterprises in the regions of the EU.

The initiative provides risk capital and enables economic growth and competitiveness.

In its new version in Bulgaria, JEREMIE provides a larger amount for risk financing of the business and less credit lines.

The registration of a Holding Fund with a capital of EUR 199 M is forthcoming. The holding will manage the resources for the Bulgarian government, the Ministry of Economy, Energy and Tourism informs Wednesday.

Three separate funds for shared investment will be set up – venture capital for newly established small companies, growth equity for small developing companies and mezzanine – a financial instrument that provides lending to growing businesses while maintaining their ability to borrow.

The venture capital fund will be alloted EUR 30 M, with the JEREMIE initiative providing EUR 21 M of those and the rest will come from outside financing.

The growth capital and mezzanine funds will have a capital of EUR 60 M, half of the sum will come from JEREMIE.

One of the criteria to hire the funds' managers will be their ability to secure outside financing.

Risk financing, along with the JEREMIE funding is to reach EUR 150 M. The remaining EUR 120 M under the initiative will be used for guarantee funds and business credit lines.

The venture capital for newly established small companies would be able to invest up to EUR 1.5 M annually while the other two do not have such restrictions.

After the amendment of the agreement with EIF, another BGN 4 M will be used to assist the business until 2015. These additional funds will come from the lower brokerage fees Bulgaria will pay to the Fund.

In its latest version, the agreement with EIF provides clearer rules for control on the part of the Bulgarian State over the work of the Fund. The most important decisions, for example, for the three funds will be made only after being coordinated with the Economy Ministry, whose representatives will be members of the Board of Directors of the Holding Fund.

The JEREMIE funds will be deposited in Bulgaria's bank system, according to the Economy Ministry.

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