European Union European Fund for Regional Development Progress

European Union European Fund for Regional Development Progress in the implementation of OP Innovation and Competitiveness 2014 -2020 Budapest, 18. 05. 2016 GD European funds for Competitiveness Ministry of Economy Bulgaria

PARTNERSHIP AGREEMENT 2014 -2020 OP Innovation and Competitiveness OP SME Initiative 9, 878 1, 080 102 OP Regions in Growth 1, 312 OP Transport and Transport Infrastructure 1, 604 OP Environment 1, 505 OP Science and Education for Smart Growth 596 OP Development of Human Resources 939 Good Governance 286 Rural Development Programme Maritime and Fisheries Programme 2, 367 88

ERDF Support per Thematic Objectives ERDF Support 251 TO 1 491 593 TO 3 OP OP OP Innovation and Competitiveness - 1, 080 SME Initiative - 102 Science and Education for Smart Growth - 243 Regions in Growth - 1, 312 Transport - 460 Environment -10% 371 30% 13% 37% 3% 7% 233 TO 4 TO 6 31 TO 7 38 TO 9 0 TO 10 0 TA 494 35 984 652 282 233 170 161 OPIC/OPSMEI Total

v Entrepreneurship EUR 259 million v Management and control of OP ic In og nd l no t a h c en Te pm 1 lo PA eve D v no a v Production capacity v ICT, standards and management systems EUR 577 million OP INNOVATION AND COMPETITIVENE SS PA 5 Technical Assistance 1, 270 MEUR 41 million PA 4 Removing bottlenecks in security of gas supplies y v Science and technology parks al PA Re 3 so En ur er ce gy Ef an fic d ie nc v Innovation infrastructure n tio d an Es ip SM sh f ur h o ne t re row ep G tr or En f 2 city PA pa Ca v R&D and innovation in enterprises v Energy efficiency in enterprises v Institutional support v Resource efficiency EUR 311 million v Construction of gas interconnector Bulgaria - Serbia EUR 45 million

v EUR 516. 4 million, i. e. 41% of OPIC budget, launched in 7 calls for proposals, 7 direct award procedures and 4 budget lines v Funding Agreement for EUR 235 million for implementation of financial instruments signed v 1 155 grant contracts signed with a total grant amount of EUR 586 million (45% of the total OP budget) v 801 projects in implementation, 286 projects completed v EUR 184. 7 million grant paid, incl. EUR 58. 75 million in FI (15% of the total OP budget)

v 2 calls for proposals and 2 direct award procedures launched ― Support for introducing and development of innovation in enterprises ― Support to Sofia Tech Park and Patent Office v Total budget (grants) – 66. 4 MEUR v Total budget (FI) - 60 MEUR v Eligible applicants - micro, small, medium and large enterprises; institutions Competitive procedures distribution per category of enterprise Financial implementation 1200 1037 302. 4 MEUR grant requested 1000 6% 27% 58. 8 MEUR grant committed 800 67% 400 295 200 93 73 18 39 80 0 micro small registered applications medium large financed applications 41 PA 1 Remaining budget PA 1 Commitments PA 1 Payments

BASIC INFO v Government-driven project, designed to advance research, innovation and technology growth in Bulgaria v 40 MEUR support for Phase I from OP “Competitiveness” 2007 -2013 and 6. 4 MEUR for Phase II from OPIC 2014 -2020 v Platform where members of the innovation ecosystem in Bulgaria can meet, share ideas and collaborate FOCAL AREAS COMPONENTS Laboratory complex Information and communications technology Life Sciences & Biotechnology Green Energy & Cleantech Incubator Managed by R&D&I Consortium Managed by “Operator” Innovation forum Managed by R&D&I Consortium Museum / Experimentarium Public-private partnership Sport complex Managed by “Operator”

v 3 calls for proposals and 5 direct award procedures launched ― Support for improvement of production capacity of SMEs - 205 MEUR ― Support for management capacity development, introduction and certification of international standards of SMEs – 30 MEUR ― Support for cluster development – 20 MEUR ― Support to SME Promotion, Invest. Bulgaria, Metrological and Technical Surveillance and Bulgarian Accreditation Service Agencies; Consumer Protection Commission– 16 MEUR v Total budget (grants) – 270. 4 MEUR v Total budget (FI) – 135 MEUR v Eligible applicants - micro, small, medium and enterprises; institutions 1000 Financial implementation Competitive procedures distribution per category of enterprise 921 900 400. 9 MEUR grant requested 800 26% 34% 232. 8 MEUR grant committed 700 573 600 500 41% 455 441 337 400 300 183 200 PA 2 Remaining budget PA 2 Commitments PA 2 Payments 100 0 micro registered applications small medium financed applications

v Government institution established in 2004 to implement the Bulgarian Government’s policy for SMEs v Government support of 11. 8 MEUR in 2007 -2013 v 5 MEUR of support approved under OPIC 2014 -2020 v 3 projects in implementation and 1 completed Focus of the support v 946 SMEs trained in skills for successful development on international markets Participation of SMEs in trade fairs and conferences Participation of SMEs in trade missions and business forums 2007 -2013 Results New technologies for better e-services v 1750 SMEs supported to participate in trade missions, business delegations and B 2 B meetings v 1312 SMEs supported to participate in international fairs International ization of SMEs v 121 market analyses of industrial sectors in different countries developed

v 2 calls for proposals launched ― Support for energy efficiency in SMEs ― Support for energy efficiency in large enterprises v Total budget (grants) – 140 MEUR v Total budget (FI) - 40 MEUR v Eligible applicants - micro, small, medium and large enterprises Energy efficiency in SMEs distribution per category of enterprise Financial implementation 3% 10% 18% 35% 87% 46% micro - 173 small - 434 medium - 334 PA 3 Total Budget PA 3 Payments PA 3 Commitments

FINANCIAL INSTRUMENTS OP Innovation and Competitiveness

Common Framework FI Final Recipients 90% Technology Transfer Fund SME& Large Enterprises 55 М 90% Acceleration & Seed Fund SMEs 25 М 60% Venture capital Fund SMEs 40 М 60% Growth Fund (Mezzanine) SMEs 70 М 80% First Loss Portfolio Guarantee* SME& Large Enterprises Risk Sharing of Micro Financing Instrument SME/ Micro Enterprises Contribution in MEUR and OPIC share 30 М OPIC Contribution (235 MEUR) § Total contribution of OPIC ‒ 235 MEUR, distributed in 7 financial instruments § A minimum amount of private co-financing of 340 15 М 70% Private co-financing (approximately 340 MEUR) *FLPG includes 2 instruments ‒ for innovation and energy efficiency MEUR or a total amount of support for final recipients up to 575 MEUR § Expected leverage ‒ 2, 45% § A minimum co-financing by the Financial Intermediaries

Technology Transfer Fund 30 MEUR Acceleration and Seed Fund 55 MEUR Venture Capital Fund 25 MEUR Growth Fund (Mezzanine) 25 MEUR FLPG 30+30 MEUR Microfinancing 15 MEUR ü R&D&I projects in an early stage deriving from Universities, Tech Parks and Science Labs ü Projects in thematic Areas of RIS 3 ü Integrated approach to supporting start-ups ü Investment focus on pre-seed and seed companies ü SMEs in their early-stage of development to achieve commercialisation, strengthen high-growth prospects, innovate, and expand ü Alternative forms of finance to high-growth SMEs with expansion plans ü Particular emphasis on strengthening the managerial capacity, corporate governance, and reporting systems ü High-risk innovative projects and energy efficiency projects ü Reducing interest rate and collateral level ü Risk-shared micro loans ü Micro and small companies in regions with high disparity which have never received a loan Market tests completed FI selection start in 3 rd Qr. ‘ 17 Market tests preparation FI selection start in 4 th Qr. ‘ 17 Market tests completed FI selection start in 3 rd Qr. ‘ 17 FI structuring and selection in 2018

OP SME INITIATIVE

Mandate statistics as of 31 st December, 2016 Highlights 6. 9 m Portfolio by SME type Medium 23% Originated as of 31 Dec, 2016 Portfolio by Industry, NACE 1 Admin & Support Services ADMINIST WHOLESA RATIVE LETrade AND & Micro Other AND Vehicle Repair RETAIL 20% 7% SUPPORT PROFESSI TRADE; ACCOMM SERVICE CONSTRU REPAIR ONAL, Construction ODATION ACTIVITIE CTION OF SCIENTIFI Portfolio by loan purpose AND OTHER S MOTOR C 2% AND TRANSPO FOOD SERVICE 3% VEHICLES TECHNIC Transportation & Other RTATION ACTIVITIE SERVICE Tangible MANUFAC AND AL Storage AND Manufacturing Investments ACTIVITIE S TURING Working 38% MOTORCY ACTIVITIE STORAGE 2% S capital 22% CLES S 20% 62% 5% Accommodation 1% Scientific & Tech 46% & Food Activities Small 57% 86 SMEs supported 25 % Collateralization level 1 3. 4 % Interest rate 2 5. 3 % Market rate for loans in BGN up to EUR 1 m with maturity >1 y and <5 y 3 Note: Based on principle amounts Progress 2016 31 st Dec 1. 1% 2 nd March, 2016: Financial Agreement signature 30 th April 2017 2018 2019 31 st Dec 9. 61% Feb, 2017: All 10 banks started originating Target vol: EUR 608 m Dec, 2016: 4 banks started originating, SMEI political commitment fulfilled Nov, 2016: 5 transaction signatures 1 Not all banks report collateralization rates as of Q 1 2017 principle amount is used to calculate a weighted average interest rate 3 BNB Statistics, February 2017, Interest Rates and Volumes of New Business on Loans to Non-financial Corporations 2 The 15

Regional statistics – NUTS 2 as of 31 st December, 2016 North-Western Construction Trade & Vehicle Repair 23% 48% EUR 0. 21 m Transportation & Storage 28% North-Central North-Eastern Construction Trade & Vehicle Repair 3% 15% Manufacturing 10% EUR 0. 68 m Transportation & Storage 71% South-Western & Support PROFE WHOLE Admin ADMINI South-Central STRATI Services Manufacturing SALE SSIONA MANUF OTHER VE AND L, ACTURI SERVIC AND Others RETAIL SCIENT NG E SUPPO TRADE; IFIC Scientific & Tech 3% ACTIVI RT Trade & REPAIR Activities AND Manufacturing TIES Trade & SERVIC Vehicle Repair OF TECHN 6% Vehicle Repair 43% E MOTOR EUR ICAL EUR 52% ACTIVI TRANS VEHICL 2. 49 ACTIVI Transportation & 2. 34 m TIES PORTA ES AND m TIES Storage 8% TION 2% MOTOR AND CYCLES 5% Transportation & STORA 57% Storage GE 23% Trade & Vehicle Repair 10% Transportation & Storage 23% EUR 0. 60 m Accommodation & Food 58% Construction 8% South-Eastern Trade & Vehicle Repair EUR 52% 0. 60 m Manufacturing 47% 1% Transportation & Storage 16

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