Investment protection

The provision of crisis-proof investments is a key aim of the European Fund for Southeast Europe's fund management, even in turbulent times.

The Fund mitigates risks for investors through:

  • Partner lending institutions' eligibility criteria:
    The Fund only invests in partner lending institutions that fulfil a comprehensive set of eligibility criteria (e.g. sound financial performance, good governance, prudent management and clear target group orientation). The level of fulfilment of these criteria is rigorously analysed.
  • Investment monitoring:
    Partner lending institutions must submit quarterly information about the target group that has been reached. In addition, they must provide a set of financial reports on a quarterly basis.
  • Currency hedging:
    Investments of the Fund are primarily Euro denominated investments. If investments are denominated in other currencies, the Fund may engage in currency hedging operations. All losses and gains of foreign exchange operations are borne by C Shares.
  • Capacity building
    Through the EFSE Development Facility selected partner lending institutions are supported in strengthening their human and institutional capacities.

The Fund aims at broad portfolio diversification by applying the following guidelines:

  • Maximum loan amount:
    The loan portfolio to one specific partner lending institution may not exceed 100% of the institution's equity.
  • Selected equity investments:
    Equity participation in any single partner lending institution may not exceed 30% of the institution's capital. The Fund is not allowed to become the single biggest equity investor.

The Fund's exposure is limited by:

  • Loan size:
    The loan portfolio to one specific partner lending institution may not exceed 100% of the institution's capital.
  • Equity size: Equity participation in any single partner lending institution may not exceed 30% of the institution's capital. The Fund is not allowed to become the single biggest equity investor.

The following guidelines ensure portfolio diversification on fund level:

  • A national portfolio may not exceed 20% of the total assets of the Fund.
  • EFSE may not invest or provide financing for more than 10% of its total assets in any one partner lending institution.
  • The Fund may not invest or provide financing in any one partner lending institution for more than 150% of the relevant C Shares.