Investment targets

The European Fund for Southeast Europe does not directly lend to EFSE’s ultimate target group, including micro and small enterprises and low-income private households. EFSE provides commercial long-term funds to carefully selected qualified local financial institutions – its partner lending institutions – after a strict due diligence for refinancing of business and rural/agricultural loans to micro and small enterprises and private individuals, as well as housing loans to private households, including housing energy efficiency loans.

Furthermore, it advises and supports these institutions in their working processes via technical assistance, consulting and training delivered through the EFSE Development Facility. Its aim is to enhance the long-term development impact of the Fund’s investments and to mitigate the risk of investments to partner lending institutions.

Currently, the Fund has investments outstanding to more than 60 partner lending institutions. The financial institutions that are refinanced by EFSE include:

• local commercial banks,
• specialised microfinance banks,
• micro credit organisations,
• other non-bank financial institutions (e.g. leasing companies), and
• investment companies or funds with a regional orientation.

Partner lending institutions bear the full risk associated with these sub-loans and, in principle, are free to define the final terms and conditions to their sub-borrowers. However, to a limited extent, the Fund's instruments bear some minimum conditions to ensure target group orientation as specified below. The maximum loan amount of the underlying sub-loans for all three products is 100,000 EUR. During the entire the credit cycle, the Fund requires partner lending institutions to comply with minimum environmental and social standards that represent international best practices.