According to the information contained in the 2018 Report issued by the Spanish Capital, Growth and Investment Association (ASCRI), during 2017, private equity and venture capital entities in Spain raised funds totalling €1.865 billion, which was 17.9 per cent below the 2016 figure. Despite this fall, new fundraisings maintained the levels recorded in recent years, leaving the period stricken by the financial crisis, 2009–2013, far behind.

Of this overall figure, total funds raised in 2017 by private equity funds stood at €1.581 billion, while the funds of venture capital entities amounted to €284 million.

With respect to the origin of the funds raised, funds of funds were again positioned as the main contributors of resources (24.8 per cent), followed very closely by pension funds (20 per cent), whereas national pension funds contributed only €54 million of the €372 million contributed by this type of investor. Family offices and private individuals contributed 13.9 per cent of total funds raised. The public sector also played a significant role in fundraising during 2017, through the funds of funds Fond-ICO Global and Innvierte (managed by Axis and CDTI, respectively), which contributed 20 per cent of the total funds raised. The European Investment Fund also remains very active on the Spanish market. In contrast, contributions by Spanish insurance companies were limited to 6.1 per cent, remaining at a level far below that of their European counterparts. Notably, most of the funds were raised from international investors (mainly going to middle-market funds), who contributed 60 per cent of the total funds raised in 2017, and signalling their interest in the Spanish market and their faith in the country's economy.

To date, the estimates published indicate that the fundraising market in Spain in 2018 has maintained the healthy level of recent years. The ideal conditions for raising new funds (confidence and interest in the Spanish market, liquidity, low interest rates and the continuity of public funds-of-funds programmes) persisted during 2018, resulting in an estimated amount of approximately €2.151 billion of funds raised by private equity and venture capital funds during the past year, which is similar to the 2016 figures.

As to management teams and fundraising periods, the Spanish market has not proved different from other jurisdictions, namely managers with a good track record have been able to raise a greater volume of funds in a period of between six and 12 months, while first-time teams have required longer periods and a greater involvement of public funds. In this context, it should be noted that reputed national management teams are already incorporating the third and fourth generation of funds.

In the private equity segment, we would highlight as recent significant fundraisings Magnum II (€425 million), Artá Capital Fund II (€400 million), Corpfin Capital Fund V (€300 million), Aurica III (€162 million), GPF II (€150 million) and the debt fund Oquendo III (€200 million); as for venture capital, we would flag up Nauta Tech Invest IV (€155 million) and the first closing of Alta Life Sciences Spain I, managed by Altamar. We have also seen an increase in interest from local and foreign investors in Spanish infrastructure and renewable-energy-focused private equity funds, such as Everwood Fotovoltaica and Helia Renovables.


In Spain private equity funds and other alternative investment entities (AIFs) are mostly governed by Law 22/2014 of 12 November (Law 22/2014), regulating private equity and other closed-ended collective investment entities and alternative investment fund management companies (AIFMs), and which implemented Directive 2011/61/EU (AIFMD) into Spanish law and amended Law 35/2003 of 4 November on collective investment entities.

Following implementation of the AIFMD through Law 22/2014, from a regulatory perspective, the product landscape of alternative investments in Spain can be divided into two separate 'buckets': (1) open-ended alternative investment vehicles (i.e., hedge funds, real estate investment funds and other open-ended non-UCITS funds), which are regulated in Spain by Law 35/2003 (as amended to implement Directive 2009/65/EC); and (2) private equity or venture capital and closed-ended collective investments vehicles, regulated by Law 22/2014, which applies to closed-ended AIFs domiciled and distributed in Spain and Spain-based alternative investment fund managers.

Without minimising the importance in the Spanish alternative investment scene of the open-ended collective investment vehicles mentioned above, it can be confidently said that, after the implementation of the AIFMD, private equity activity in Spain has mostly been pursued under private equity and venture capital structures, in the form of private equity or venture capital funds, or limited liability companies.

Both Spain-based alternative investment fund managers and national and foreign investors have been receptive to the closed-ended structures available in Spain (described below) when the fund is aimed at equity investments. As proven by the number of funds raised during 2017, described in Section I, Spain has consolidated itself as a friendly jurisdiction for establishing closed-ended AIFs whose investment strategy is focused on equity assets located in Spain or certain European regions. However, the forms of closed-ended collective investment vehicles available in Spain have been generally disregarded by managers of mezzanine and other debt-based AIFs, who have preferred to set up their operations in other EU jurisdictions, such as Luxembourg.

i Legal forms for closed-ended alternative investment vehicles

Law 22/2014 defines closed-ended alternative investment as the activity pursued by both private equity and venture capital entities (ECRs) and closed-ended collective investment entities (EICCs).

EICCs are defined as any collective investment entity – other than ECRs and open-ended alternative investment vehicles regulated under Law 35/2003 – lacking a commercial or industrial purpose, which solicits capital from a series of investors for it to invest in any form of financial or non-financial assets, pursuant to a clearly defined investment policy. This very broad definition is intended to have a force of attraction, so that any form of capital solicitation (i.e., marketing or distribution) for collective investment vehicles in the private market in Spain will be subject to registration requirements and regulatory oversight by the Spanish National Securities Market Commission (CNMV).

ECRs are defined as EICCs whose investment policy is limited to temporary investments in private companies other than real estate companies or financial entities or assets. As a sub-type of ECRs, Law 22/2014 provides for a specific regime applicable to ECRs whose investment policy is aimed at investing in small and medium-sized enterprises (SMEs), the ECR-SMEs.

Both ECRs (including ECR-SMEs) and EICCs can be created in the form of a fund (FCR/FICC) or a limited liability company (SCR/SICC). Among others, the essential practical differences between ECRs and EICCs – in favour of the ECR – are (1) the preferential tax treatment that Spanish laws afford ECRs and (2) the ability to market ECRs to retail investors who comply with certain minimum requirements (see Section II.vi). On the other hand, EICCs are not subject to the investment limitations, thresholds and diversification obligations to which ECRs (including ECR-SMEs) are subject.

We summarise below the main features of the most common forms of closed-ended AIFs in Spain.

ii Private equity and venture capital funds

The most common form of AIF in Spain where the sponsor is a Spain-based registered AIFM is a private equity or venture capital fund (FCR).2 An FCR is a separate pool of capital held by a number of investors with no legal personality whose management and representation is legally bestowed upon a duly registered AIFM and whose constitutional documents and investment policy comply with the ECR requirements under Law 22/2014.

An FCR is the institution under Spanish law that most closely replicates the Anglo-Saxon limited partnership-type of fund structure. Making a simplified comparative analysis, the AIFM and the holders of FCR participations would be, respectively, the equivalent of the general partner and the LPs under a limited partnership-type of fund structure.

The FCR is legally created upon the cumulative completion of the following steps: (1) the initial contribution of a minimum amount of funds or eligible assets by one or more investors and, as the case may be, the AIFM; (2) the formalisation of the relevant contract for the creation of the fund, which must include, among other things, the FCR's management regulations and defined investment policy; and (3) the filing and registration with the CNMV of (1) of the fund contract, (2) the prospectus, including all the information about the AIF and the AIFM required under Law 22/2014, and (3) if the FCR is marketed to retail clients, the key information document required under Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (the PRIIPS Regulation).

The creation of an FCR is not subject to prior authorisation by the CNMV, but it has to be registered with the CNMV registry before the AIFM can start the FCR's marketing and operations. The role of the CNMV registry is limited to checking the completeness of the documentation filed for registration, without prejudice to the oversight capacity and disciplinary powers of the CNMV over the sponsor AIFM in relation to its pursuit of marketing or distribution and management activities related to the FCR. The CNMV usually takes two to 10 days to register the FCR.

A qualified AIFM may choose to set up a European FCR (FCRE), in which case, the FCR must comply with the requirements under EU Regulation No. 345/2013, as amended by EU Regulation 1991/2017.

The mandatory content of the management regulations is very similar to the content required of other equivalent alternative investment vehicles in other EU jurisdictions, including the specific defined investment policy. In Spanish market practice, FCR management regulations commonly include the most typical key legal terms covered by Anglo-Saxon limited partnership agreements.

The following are some of the most typical negotiable terms of FCR management regulations and some of their current trends:

  1. term (10 years (+ one + one)) and investment period (five years + one);
  2. management fees: more and more often we find management fees that vary among investors according to volume invested, time of the investment, etc., and even no payment of a management fee on team commitments. There is also a tendency to impose a global limit on the management fees received by the managers throughout the life of the fund;
  3. increasingly detailed regulation of co-investment opportunities, exclusivity of the management company and conflict of interests that affect the management team, the management company and the fund;
  4. removal of the management company (1) with cause, adding, as usual causes, unsolved key man events and change of control and (2) without cause, with an increasingly detailed vesting scheme of the carried interest;
  5. parallel fund structures and their regulation;
  6. increasingly detailed regulation of recycling options and temporary distributions; and
  7. limitations on indemnities of the management team in connection with third-party claims.

iii Private equity or venture capital limited liability company

The most-used form of AIF in Spain after the FCR is the private equity or venture capital company (SCR).3 An SCR is a limited liability company whose constitutional documents and investment policy comply with the ECR requirements under Law 22/2014.

Compared with the FCR, the main practical differences displayed by the SCR are described in the following paragraphs.

An SCR may be managed internally (i.e., by providing it with all the requisite management resources, both human and material) or externally (i.e., by a duly registered AIFM).

As an exception to the general rule, the incorporation of an internally managed SCR is subject to prior authorisation by the CNMV, a process that is substantially equivalent to that of the authorisation of an AIFM. The possibility of internal management allows for an investor or a number of investors to sponsor the creation of an SCR, without the presence of an AIFM.

It is also possible to create an internally managed SCR that delegates certain AIF management functions to a duly registered AIFM or other authorised collective investment management or financial entities.

In terms of incorporation and the setting up of its activity, an SCR externally managed by a duly registered AIFM is not subject to prior authorisation by the CNMV, but only to a post-incorporation registration requirement similar to the regime applicable to an FCR.

As a consequence of their corporate form, SCRs are subject to the Spanish Capital Companies Act in any and all matters not expressly regulated under Law 22/2014.

Therefore, the SCR must be incorporated by execution of a public deed in front of a notary and must be registered at the Companies Registry, a process that may take up to 15 days. This is a prerequisite for filing the incorporation documents with the CNMV, which then follows the same procedure as it does with FCRs. This duplication of registration processes entails a substantial delay in the incorporation of the vehicle, which is avoided in FCR structures.

Certain decisions will be reserved to the board of directors or the general shareholders' meeting according to the law. The legal rules and mandatory prior notice periods applicable to the calling of the shareholders' meeting or the board meeting will apply, while the FCR management regulations provide more flexibility when it comes to the internal organisation of the decision-making process.

In the case of an externally managed SCR, such decision-making may not be delegated to the AIFM, which, from a practical perspective, results in additional formal requirements and shareholder involvement in the investment or divestment decision process.

The rules on dividend distributions, share capital increases and reductions, the creation of reserves and other creditor protection provisions in the Spanish Capital Companies Act will apply, making the SCR a less flexible vehicle than the FCR for those purposes.

In terms of fund documentation, in the case of an SCR, the typical terms included in the limited partnership agreement in Anglo-Saxon structures or in the fund management regulations described in Section II.ii are also included in the SCR contractual documentation. However, instead of most of these terms being included in a single document, such as the FCR management regulations, they are split between: (1) the SCR by-laws, (2) the management agreement entered into between the AIFM and the SCR, (3) the private placement memorandum or prospectus, (4) the investment commitment letters, and (5) in internally managed SCRs or SCRs with a reduced number of significant investors, shareholders' agreements or side agreements.


Despite the additional investment management flexibility offered by EICCs, the lack of a privileged tax regime and the inability of AIFMs to market EICCs to retail investors have substantially limited the potential for expansion of the use of EICCs. As at 23 January 2019, according to information publicly available on the CNMV website, only 20 SICCs and 14 FICCs are registered with the relevant registries of the CNMV.

That said, it must be noted that this type of entity, both in the corporate and fund forms, represents an opportunity for Spanish AIFMs to expand their fundraising activities, as they allow AIFMs to search for new alternative investment opportunities in financial, real estate, commodities and other assets that are not eligible for ECR vehicles or that, although eligible, the maturity or other characteristics of the investment would be incompatible with the investment limitations and diversification obligations required of ECRs.

v Legal regime applicable to alternative investment fund managers in relation to fundraising

AIFMs regulated by Law 22/2014 must apply for authorisation by the CNMV to conduct their activities. For an AIFM to be authorised by the CNMV to pursue AIF management activities, it has to comply with all the AIFMD requirements as these have been implemented into Spanish law by Law 22/2014. Among others, an AIFM must be sourced with sufficient capital, human talent and material resources and be organised in a manner that ensures the provision to the AIF of the common functions of professionally regulated investment managers, such as investment portfolio management, risk management, liquidity management, compliance, internal audit, valuation, etc. The remuneration policy, incentive schemes, delegation of functions to third parties, conflicts of interest management and any other policies related to the AIFM functions must comply with the principles set out in Law 22/2014 and EU regulations and standards.

As regards the depositary function, Law 22/2014 establishes that the AIFM may perform this function if the AIFs that it manages are not marketed to retail investors and the assets under management by the AIFM do not exceed (1) €100 million, if the AIFs managed use leverage, or (2) €500 million, if none of the AIFs managed by the AIFM use leverage or have shareholders' redemption rights in a period shorter than five years. If the AIFM markets the AIF to retail investors or the above thresholds are exceeded, the AIFM must appoint a third-party qualified depositary for each AIF that it manages.

Once the AIFM is authorised by the CNMV and fully operative, it must comply with a number of fiduciary duties in relation to the investors and must observe certain basic conduct principles expressly provided for under Law 22/2014. Those fiduciary duties and principles apply across all lines of activity and functions of the AIFM, but two of those duties are particularly relevant in the context of the fundraising process: (1) the fiduciary duty of loyalty (including the obligation to avoid and manage conflicts of interest) and (2) the equal treatment principle.

To minimise and manage conflicts of interest, AIFMs must (1) devise and formalise organisational procedures to avoid, detect, control and manage conflicts of interest that may harm the interest of the investors and (2) implement those procedures and regulations loyally to the interests of investors, including taking any necessary organisational actions that may be required to remove persistent conflicts of interest. Additionally, the AIFM and its managers and shareholders must disclose their holdings, investments or relations with entities that may potentially result in a conflict of interest that may not be controlled and managed by the organisational and administrative mechanisms envisaged in the organisational procedures.

Albeit an essential investor protection rule, the equal treatment principle is probably the principle with the most impact on the fundraising process. As anticipated in Section II.ii above, it is becoming increasingly common to have fee structures that differentiate investors depending on the volume invested, timing of the investment, etc. Law 22/2014 frames the equal treatment principle with a degree of flexibility, subject to strict compliance with the full transparency principle, which serves as the positive limit to this flexibility. Thus, in Spain, AIFMs are allowed to afford a different or privileged treatment to a particular investor or category of investors as long as this different or privileged treatment is expressly and transparently disclosed in the management regulations, constitutional documents and the AIF's private placement memorandum or prospectus. In Spanish fundraising practice, it is also becoming relatively common to complete the provisions of the management regulations or constitutional documents relating to the equal-treatment principle by introducing a 'most-favoured-investor' clause, to ensure that any future investor encountering the same conditions as those that resulted in the original investor being granted special treatment is afforded the same treatment.

vi Marketing and distribution

Law 22/2014 defines marketing and distribution of ECR and EICC shares very broadly, including any form of direct or indirect solicitation of investment by any type of investor in the ECR and EICC.

As a general rule, shares in an ECR or EICC may only be marketed and distributed to professional investors. However, to allow AIFMs to market ECRs to investors who would otherwise be treated as retail investors according to Spanish capital markets regulations or MiFID, but who are, for example, high-net-worth individuals, family offices or any other type of investor whose classification under MiFID could be disputed, Law 22/2014 expressly provides for an exception that substantially expands the potential investor base to which the sponsor AIFM can direct its marketing efforts.

Law 22/2014 allows AIFMs to market the shares in an ECR (but not in an EICC) to any retail investors to the extent (1) it has provided the relevant investor with the prospectus, the management regulations, annual report or any other relevant information on the investment in the ECR prior to the subscription of the shares or the commitment letter, and (2) the following minimum requirements are fulfilled:

  1. the investor commits of a minimum amount of €100,000; and
  2. the investor states in writing, in a document separate from the commitment letter or contract, that it is aware of the risks of investing in the ECR.

Following the entry into force of the PRIIPs Regulation in 2018, the AIFM must also provide retail investors with the applicable key information document. The AIFM must obtain evidence that the retail investor has the required knowledge, expertise and experience to independently evaluate the risks of the investment in ECR shares and has to keep supporting written documentation of the analysis of the fulfilment of the requirements performed by the AIFM and the positive outcome.

However, EICC shares can also be acquired or subscribed by retail investors if (1) no marketing or distribution has taken place (i.e., the subscription results from the unsolicited expression of interest by the retail investor, known as 'reverse solicitation'), and (2) the requirements under (a) and (b) above have been met.

From a practical perspective, it could be said that the most common forms of marketing and solicitation by AIFMs in Spain are direct solicitation and by delegation of the marketing function to a private placement agent. The limited number of professional institutional investors and the existence of prominent industry associations are key factors in having AIFMs choose the personal approach to institutional investors. This takes the form of direct presentations and roadshows, which is becoming increasingly popular among the most prestigious Spanish AIFMs, whose AIFs are aimed exclusively at professional investors and have a previous track record and direct contact with investors in previous funds managed by such AIFMs. On the other hand, in the case of newcomers, using private placement agents is probably the most common form of addressing the fundraising. Additionally, when AIFMs – taking advantage of the option provided by Law 22/2014 – intend to market ECRs to retail investors, they usually delegate the marketing and distribution of the product to the private banking arm of financial institutions or specialised wealth management firms.

vii Key disclosure items during the fundraising period

From a regulatory perspective, Law 22/2014 sets out the obligation of the AIFM to deliver to the investor, before its investment is formalised, a prospectus or private placement memorandum including the AIF management regulations or by-laws and, among other things, a description of:

  1. the investment policy and strategy, including geographic area, instruments, risk profile, use of leverage and associated risks and limitations on investment;
  2. the procedures to amend the investment policy and strategy;
  3. the legal implications of the underlying contractual relations;
  4. the identity of the auditor, depositary (if applicable), entities to which the AIFM may have delegated certain functions, and any other relevant suppliers of the AIFM;
  5. risk management tools used by the AIFM;
  6. the valuation criteria and methodology;
  7. liquidity risk management tools;
  8. any fees and costs to be borne by the investors;
  9. the preferential treatment afforded to an investor or category of investors, if any, the mechanisms to ensure equal treatment to all investors, any relations that may exist between certain investors and the AIFM and any information related to conflicts of interest;
  10. the historical track record of the relevant ECR or EICC, if available;
  11. any relation with financial intermediaries, placement agents, etc.; and
  12. if applicable, information about the use of leverage.

In addition to the mandatory prospectus disclosure described above, it is common practice in Spain (as in other jurisdictions where private equity has become a common financing tool) for the AIFM to prepare a set of due diligence materials with additional detailed information about the AIFM, the key managers and the key due diligence items commonly required by professional institutional investors. These materials are complemented by a question-and-answer (Q&A) process. The usual topics disclosed in the due diligence materials include an executive summary of the main transactions completed in the past by the AIFM team, the organisation of the AIFM, the experience of the team members, their roles, details of the shareholders of the AIFM and certain financial information such as the co-investment commitment of the AIFM team, the carried interest general vesting rules, management fees and operating budget. It is also common for information to be requested on previous fund returns, benchmark fee comparisons, potential deal flow pipeline, portfolio packs, value creation analysis, practical details of the investment process and certain legal documentation.


i Regulatory oversight and recent developments

As indicated in the previous sections, the Spanish governmental agency in charge of overseeing funds, the fundraising process and the relationship between the AIFM and the alternative investment investors is the CNMV.

Setting aside regulatory developments at EU level, there have been a few regulatory developments from a purely Spanish standpoint:

  1. on 14 December 2018, the government enacted Royal Decree-Law 22/2018, on macro prudential tools, which enables the CNMV to require AIFMs to increase the proportion of their investments in liquid assets should the need arise to guarantee financial stability or to ensure application of the equal treatment principle;
  2. on 26 November 2018 the CNMV issued Circular 5/2018, establishing further transparency and reporting requirements for AIFMs, especially in connection with variable remuneration received by AIFM employees; and
  3. in 2018, the Spanish government transposed MiFID II into Spanish law through several amendments to the financial conduct rules under the Spanish Capital Markets Act, applicable, by reference, to AIFMs.

Notwithstanding the various Circulars issued by the CNMV (whose content is mainly technical), Law 22/2014 remains the only Spanish legal instrument implementing the AIFMD into the country's legal system, with Law 25/2003 applying secondarily to AIFMs in all matters not expressly regulated under Law 22/2014.

On 13 October 2016, the CNMV issued a Q&A document answering certain questions about its interpretation of certain provisions of Law 22/2014; the document was updated on 23 November 2018 and is publicly available through the CNMV website.

ii General remarks on tax treatment of closed-ended AIF

Both ECRs and EICCs are fully liable to corporate income tax in Spain (with no possibility or option of being tax-exempt) and therefore cannot be treated as fiscally transparent or as flow-through entities. Both types of entity are eligible for the Spanish general participation exemption, provided that they comply with the requirements imposed under Article 21 of Law 27/2014 of 27 November 2014 (the CIT Law), including, among other things: (1) holding a minimum ownership percentage of at least 5 per cent or acquisition cost of at least €20 million; and (2) a minimum holding period of at least one year.

ECRs can also benefit from a special tax regime applicable to capital gains and dividends obtained from qualifying investments, but only where those investments do not meet the following criteria for the Spanish general participation exemption:

  1. Capital gains obtained by an ECR on the transfer of its Spanish and non-Spanish qualifying investments will be 99 per cent exempt, provided that the transfer takes place between the second and the 15th year of investment (both inclusive). Subject to the approval of the Spanish tax authorities, this term may be extended to up to 20 years in certain cases. If the qualifying investment is floated on a regulated stock exchange, divestment should occur no later than three years after the initial public offering for the ECR to benefit from the special regime.
  2. Dividends or distributions of profits obtained from qualifying investments will be eligible for the Spanish general participation exemption without the holding threshold or period requirements having to be met.

There is no provision under the special tax regime that refers to interest income and, accordingly, ECRs and EICCs will be subject to the general corporate income tax regime with regard to any interest income, whether from a Spanish or foreign source.

The special tax regime stipulates a specific tax treatment for ECR investors, applicable to dividends and capital gains received from their holdings in ECRs, which in turn depend on the nature and residence of each investor:

  1. Spanish corporate tax taxpayers (as well as non-resident investors acting in Spain through a permanent establishment) will be entitled to apply the Spanish general participation exemption without the holding threshold or period requirements having to be met for dividends obtained and capital gains disclosed on their holdings in ECRs.
  2. Non-resident individuals or corporations without a permanent establishment in Spain will not be taxed in Spain on dividends obtained and capital gains disclosed on their holdings in ECRs, unless they obtain them through, or are located in, a tax haven, in which case they will be subject to non-resident income tax.
  3. Spanish-resident individuals will be taxed at their general individual tax rates on dividends obtained and capital gains disclosed on their holdings in ECRs.


In our view, the outlook for the private equity markets in Spain remains positive. The number of newcomers and third- and fourth-generation funds raised by consolidated management teams is increasing, and the volume of alternative investment assets under management by the most prestigious management teams continues to grow. Despite some political uncertainty, both global and local, the perceived general international investor consensus is that Spain is an attractive market offering interesting investment opportunities – 60 per cent of total funds raised in 2017 came from international sources – and this indicates that the Spanish fundraising market will continue to be very active in the coming years.

In terms of trends, we would highlight (1) GP-led secondary transactions (i.e., processes instigated by the manager of an ageing fund to allow investors to walk away with a distribution or remain invested in some way, usually in a new vehicle); (2) LPs' direct co-investment transactions; and (3) the increase in the number of participants and of the contribution of public funds to venture capital – with a particular focus on digital business and innovation, and sustainability and social impact funds.


1 Jaime Bragado Yturriaga, Francisco Martínez Iglesias and José Luis Ortín Romero are partners and Álvaro Manteca Rodríguez is a principal associate at J&A Garrigues, SLP.

2 According to the information available at the CNMV website (www.cnmv.es) a total of 197 FCRs were registered with the CNMV as at 23 January 2019, which included eight FCR-SMEs and eight FCREs.

3 According to the information available at the CNMV website (www.cnmv.es) a total of 138 SCRs were registered with the CNMV as at 23 January 2019, which included 17 SCR-SMEs.