Brussels, 22/01/2014 (Agence Europe) - On Wednesday 22 January, the European Commission found several amendments to a UK scheme allowing publicly-backed funds to invest in small and medium-sized enterprises (SMEs) affected by a market failure to be in line with EU state aid rules. The Commission found, in particular, that the measure encourages private investment in SMEs while limiting distortions of competition in the single market. The UK authorities changed the scheme to raise (i) the public resources into Enterprise Capital Funds (ECFs) from £25 up to £50 million, (ii) the initial investment tranche from £2 up to £5 million, and (iii) the overall investment cap up to €15 million (around £12 million) per undertaking. The scheme will be in place for ten years as of 2014. Public capital contributions will be limited to 66% or 60% of the funds, based on their profile (i.e. fund targeting respectively early or later stage SMEs) and will be invested only in SMEs facing an equity gap (i.e. SMEs with no commercial sale or operating in a market for less than seven years following their first commercial sale, or SMEs with limited commercial activity and planning to enter a new market). Moreover, to improve the investees' efficiency, the scheme will allow for capital replacement operations in very specific and limited situations, namely when the buy-out of an existing investor is coupled with the provision of fresh capital representing at least 50% of the capital replaced or, in the absence of additional fresh capital, for buy-outs up to £100 000 per transaction and per company. (FG/transl.fl)