Investment structure

The European Fund for Southeast Europe utilises a tiered risk-sharing structure. Its liabilities consist of three types of securities bearing different risks:

1. Senior A,
2. Mezzanine B, and
3. Junior C Shares.

Private investors invest in the Senior Tranche, international financial institutions invest in the Mezzanine Tranche, donor agencies in the Junior Tranche. The Junior Tranche represents a first-loss tranche, fully subordinated to all other classes of securities issued.


The diagram is for illustration purposes only and may not be representative of the actual share class sizes.The Fund operates as a single compartment fund which guarantees a streamlined structure and a minimum of operating units. Given the fund structure, full cross country-collateralisation among A and B Shareholders is in place which guarantees the solid risk position for Notes.

The C Shares bear the first net loss risk incurred in the fund. The B Shares will only suffer a net loss to the extent that the C Shares are depleted, being followed by A Shares and Notes.

The earmarking of C Shares assures that National C Shares for use in a particular country or region can only be used for financing and risk absorption in the dedicated country or region. In addition to that, Regional C Shares provide both - a maximum 30% additional coverage for countries with National C Shares as well as 100% coverage for countries without dedicated National C Shares.