Financial Instruments in Niedersachsen

Financial Instruments in Niedersachsen Experiences, Design and Best practice
Ulrike Müller, Brussels,
03-07-2016
Agenda

Facts about Niedersachsen

Facts about NBank

Financial Instruments in Niedersachsen


Venture Capital

Micocredit: e.g. MikroSTARTer

Innovation Loan
What has to be told
Seite 2
Facts about Niedersachsen (1)
 Located
in north-western Germany
 Second
biggest and the fourth most
populated of the 16 German
“Bundesländer”
 Size
of ~ 47.000 km² and a
population of 7.900.000 people
 Capital
of Niedersachsen is
Hanover with 500.000 inhabitants
 Other
big cities are Braunschweig,
Osnabrück, Oldenburg, Wolfsburg
and Göttingen
Seite 3
Facts about Niedersachsen (2)
 Automotive
 Nutrition
is the major industry sector in Niedersachsen
industries is the second largest industry in Niedersachsen
 World
known shipbuiding expertise (e.g. 1795 the Meyer-Shipyard
specialized in new luxury liners), aircraft engineering and agrarian country.
 Home
of leading international fairs, e.g. Hannover Industrial Trade Fair and
CeBIT, AGRITECHNICA, Domotex
Seite 4
Facts about NBank (1)
 Bank
for investment and economic
development in Niedersachsen
 Founded
2004
 Based
in Hannover with four
branches
 Owned
by the State of
Niedersachsen (100 %)
 Full
banking licence
 Approximately

400 employees
total balance ~ 5 bn €
 Only
consulting and granting
institution for ERDF- und ESFInstruments in Niedersachsen
Seite 5
Niedersachsen
Facts about NBank (2)
Funding Volume 2014 in Mio. €
Promotion of:
85,9
Business
Infrastructure
Housing
71,9
Labour market
241,5
136,6
Seite 6
Agenda

Facts about Niedersachsen

Facts about NBank

Financial Instruments in Niedersachsen


Venture Capital/ Private Equity

Microcredit: e.g. MikroSTARTer

Innovation Loan
What has to be told
Seite 7
Financial Instruments in Niedersachsen
2009 Venture Capital/ Private Equity Fund
2013 Microcredit Fund
2014 Ex ante assessments for 5 instruments
Seite 8

MikroSTARTer

Innovation Loan

Venture Capital NKB

Micro Venture Capital Fund

CO2 - Fund
Implementation of 3 Funds 2014-2020
MikroSTARTer
Innovation Fund
Venture Capital/
Private Equity
Fund
Seite 9
Financial Instruments in Niedersachsen
Venture Capital (1)
Development since 2008
 Venture
Capital/ Private Equity need of SMEs and MIDCaps / insufficient
market supply for equity and quasi-equity investments
 Little
experience with EU-FI in Niedersachsen
 2008
decision by the State of Niedersachsen to invest into a VC Fund
establishment of NKB – Niedersächsiche
Kapitalbeteiligungsgesellschaft GmbH, 100 % daughter of NBank
 2009
Seite 10
Financial Instruments in Niedersachsen
Venture Capital (2)
 2009
Funding agreement for the first venture capital fund
 Management
of the fund by MBG - Mittelständische Beteiligungsgesellschaft
– public Investment Company for SME and MidCaps
 Know How and long term experience for Venture Capital
 Administration
 2015
Funding agreement for the second venture capital fund
 Management
 Fund
Seite 11
of the EU-FI by NBank/ NKB
and adminstration by NBank/ NKB
includs contributions of private partners  State aid advantage
Financial Instruments in Niedersachsen
Venture Capital / Private Equity (4)
Seed/Startup
Equity
Own resources
Dept.Capital
Seite 12
Growth
Buyouts
Equity holding
Dormant equity holding - subordinated
Dormant equity holding
Turnaround/
Liquidation
Financial Instruments in Niedersachsen
1. Venture Capital - Second VC Fund (3)
Design
Capital 150.000 – 600.000 Euro for Seed / Startups
 Venture
 Private
Equity 250.000 - 2,5 Mio Euro for SME,
 Dormant
equity holding and equity holding, possibility for subordinated
equitiy holding
 Duration
7-10 Years
Challenges
 Two
different action areas, which have to be reported, monitored, surveyed
seperately
 Private
Partners: advantage in terms of state aid but disadvantage in terms
of IT-implementation and reporting, controlling, counselling
 Difficult
Seite 13
market in times of low interest rates
Financial Instruments in Niedersachsen
Venture Capital/ Private Equity 2009-2015
First VC Fund (5)
Share of Different Volume Sizes
13%
17%
Sizes ranges
bis
≤ 250 TEUR
31%
>250 bis
≤ 500 TEUR
≤ 1.000 TEUR
>500 bis
39%
Seite 14
>1.000 TEUR
Financial Instruments in Niedersachsen
Venture Capital/ Private Equity 2009-2015
First VC Fund (6)
Share of different Economic Sectors
1%
Agriculture, Forestry, Fishery
10%
Producing Industry
1%
4%
Power Supply
60%
Building Industry
Trade
Information & Communication
20%
Scientific & Technical Services
3% 1%
Seite 15
Other Services
Implementation of 3 Funds 2014-2020
MikroSTARTer
Innovation Fund
Venture Capital/
Private Equity
Fund
Seite 16
Financial Instruments in Niedersachsen
Microcredit Fund (1)
 2013
First funding agreement
 Total
volume 6,7 Mio €
 ESF-based
instrument in phasing out area Lüneburg
 2015
Second funding agreement
 Total
volume 32 Mio. €
 EFRD-based
Seite 17
instrument in all parts of Niedersachsen
Financial Instruments in Niedersachsen
Microcredit Fund (2)
Design
 5.000
- 25.000 €
 interest
rate 4,2% p.a. fix
 Duration
2 – 5 years
 No
prepayment penalty
 No
underlying
 Positive
assessment from a listed appropriate consultant (Banks, Chamber
of commerce, (public) business promoter)
Seite 18
Financial Instruments in Niedersachsen
Microcredit Fund from the Idea to the Decision (3)
Applicant
Expert
Expert‘s Assessment
Assessment
Electronic Front
Gate /
Kundenportal
Credit Agreement
Seite 19
NBank
Information about Credit Decision
Credit Decision
Application
MikroSTARTer Best Practice (4)
 Recruitment
and coaching service
 pooling
nursing staff from Spain and nursing homes and hospitals in
Germany
 USP:
a proven and tested process for matching the future partners,
knowledge of legal frame and cultural fundamentals from both countries
 2014
Search for financial means
 2015
expert assessment
application and loan commitment by NBank
 MikroSTARTer (25%), loan (55%), own resources (20%)
Start with 2 employees
 2016
Seite 20
7 employees, 150-200 placements expected
Financial Instruments in Niedersachsen
Microcredit Fund Challenges From the
View Point of a Promotional Bank (5)
 (Only)
Financing option for seed and startups
 ~ 80% of recepients are successful and able to return the loan!
 Average
microcredit user is unexperienced in business management,
specialized in his/ her product with little market overview but convinced to
have a good business idea.
Comprehensive application procedure neccessary
 Compared
to the loan amount, administration costs are high
Standardisation
Particularly
Seite 21
of administration is neccessary but difficult
if national requirements supplement EU requirements
Implementation of 3 Funds 2014-2020
MikroSTARTer
Innovation Fund
Venture Capital/
Private Equity
Fund
Seite 22
Financial Instruments in Niedersachsen
Innovation Fund (1)
Initial situation
 Insufficient
market supply for innovative enterprises, confirmed by ex ante
assessment
 Requirement
for possibility to finance innovative projects in addition to the
grant  to overcome the missing financial gap.
 According
to CPR Art. 37 combinations of grants and loans are very
difficult to handle, high probability of faults
 Therefore
projects
Seite 23
no combination within one application, but loans for innovativ
Financial Instruments in Niedersachsen
Innovation Fund (2)
Design
50 Mio. €
 Fund
 30.000
 Fixed
- 1.000.000 €
interest for 10 years
 Interest
reference rate plus rating spread  therefore no state aid
 Instalment
 No
Loan
prepayment penalty
 No
underlying, but the recipients have to finance 10-50 % of the project
costs (depending on the size of enterprise)
 R&D
Seite 24
projects and pilot– and demonstration projects of SMEs and MidCaps
Financial Instruments – What Needs to be
Told
Main advantage:
Financial instruments are revolving
Main challenges:
 The
 It
regulations (EU, national/ regional) for FI are enormously extensive.
means an effort to be sure to be updated at any time.
A
base and performance-based remuneration presumes exact estimation at
the time of negotiation of financial agreement
 Late
publication of delegated acts
 Expenses
monitoring
Seite 25
and complexity of IT- implementation for e-cohesion and
Thank you for your attention!
Seite 26
Mehr Informationen zur NBank finden Sie
unter www.nbank.de!
Rufen Sie uns gerne an:
Montag bis Freitag von 8.00 bis 17.00 Uhr!
Unsere Infoline: 0511 30031-333
Vielen Dank für Ihre Aufmerksamkeit!
Die NBank ist die Investitions- und
Förderbank des Landes Niedersachsen