Brief description of the product Scope of beneficiaries Fees, expenses Application, decision-making, contracting process Collaterals

Brief description of the product

With its portfolio equity guarantee product Start Zrt. offers guarantee explicitly for venture capital funds registered in Hungary for the provision of equity financing for SMEs by reimbursing up to 50% of incidental capital losses upon the fund’s final settlement.

Start Zrt. provides portfolio equity guarantee for a minimum of HUF 500 million to a maximum of HUF 1,000 million investments and for a term of a minimum of 7 to a maximum of 12 years.

Scope of beneficiaries

The beneficiary of a portfolio equity guarantee may only be such equity fund that qualifies as a newly founded venture capital fund registered in Hungary in accordance with current Hungarian legislations and which invests at least 60% of its capital in Hungarian SMEs in the form of capital increase.

Fees, expenses

Guarantees are issued against a fee payment.

Contract and notary fee

The client is requested to pay a one-time fix contract fee upon signing the contract amounting to HUF 100,000 in addition to notary charges arising from the notarisation of the contract and its appendices.

Guarantee fee

A pre-payment amounting to between 1-4% annually is required every six months calculated on the basis of the guarantee provided by Start Zrt.

Profit-sharing

During the term of the guarantee the client is required to pay a percentage (maximum of 5%) of the profit realized on the guaranteed amount of the investment to Start Zrt. as a profit-share.

Profit realized on the client’s investment should be calculated as follows:


P = Profit;
R = payments received by the client during the term of the guarantee (dividend, capital decrease, sums paid out at final settlement, others);
I = initial capital contribution paid in cash to the venture capital fund.

Application, decision-making, contracting process

1. Application is initiated by the client. The client (the fund manager of the venture capital fund) provides Start Zrt. with an electronic- and a hardcopy of the completed and signed application form available from the homepage of Start Zrt. together with its appendices;
2. Following fulfilment of point 1. the decision-preparatory process begins at Start Zrt.;
3. Based on the risk and financial analysis conducted by Start Zrt. and following the evaluation of the documentation provided by the client, Start Zrt. makes a decision about the client’s application. In the event of Start Zrt. approving the application it submits a written guarantee offer to the client, which offer, amongst others, includes the amount of the portfolio equity guarantee, the term, conditions of payment and any other conditions the client must meet in addition to the time available for accepting the offer;
4. Following the client’s acceptance of the offer outlined in point 3. Start Zrt. signs a guarantee contract with the client based on which it then issues the guarantee statement in relation to the guarantee offered.

During evaluation of an application and in determining terms of the guarantee Start Zrt. conducts an analysis primarily of the client (venture capital fund manager and the fund) and its management, ownership structure, investment policy, rules of procedures and deeds of foundation and bases any decision on this analysis.

Start Zrt. reserves the right to reject any application submitted on the account of its own decision without having to offer any reason to the client for the decision. Until such time that a guarantee contract is signed Start Zrt. has the right to desist from a transaction.

Collaterals

In the guarantee contract document Start Zrt. defines the scope of issues relating to the operation of the guaranteed venture capital fund in relation to which valid decisions may only be made after the written consent of Start Zrt. as guarantor had been obtained. Such issues may include the change of the fund manager, fundamental changes in the ownership structure, or a change in the investment policy of the fund.