“Factory” will add capital – Kommersant

The White House once again softens the requirements for private investors in the factory of project financing. To increase the number of large projects implemented through this mechanism, until the end of 2024, the rule on reducing the minimum share of investor funds in a project from 20% to 15% is extended. In addition, the possibility of reducing this share to 10% is being introduced through the participation of equity funds. While such funds are only getting ready for launch, they will make it possible to finance projects for which the initiators do not have enough own funds.

By a decree, the government changed the rules for the operation of the project financing factory, Prime Minister Mikhail Mishustin said yesterday at a meeting with his deputies. Recall that we are talking about a mechanism for financing large projects (from 3 billion rubles) through syndicated loans attracted by VEB.RF at preferential rates. The stability of these reduced rates is guaranteed throughout the life of the project. Currently, 18 projects worth 1.4 trillion rubles are being financed within the framework of the factory, and 39 more initiatives worth 5 trillion rubles are under consideration.

The updated rules should increase the availability of this mechanism. The resolution extends until the end of 2024 the rule on reducing the share of co-financing of projects at the expense of investors’ own funds from 20% to 15% (see Kommersant dated November 15, 2022). As Ilya Torosov, First Deputy Head of the Ministry of Economy, explains, lowering the threshold will allow the implementation of a greater number of large investment projects.

To further reduce the share of funds of the project initiator (up to 10%), the participation of equity funds is envisaged, which will be able to finance up to half of the size of its investments. We are talking about funds that will be formed at the expense of investments of banks and VEB.RF. The idea has been discussed since last year, and yesterday the state corporation announced that it had agreed on a program to create such funds. Their total amount will be up to 200 billion rubles. (one fund – up to 50 billion rubles). For investments in funds, risk ratios for banks will be reduced for up to eight years. At the same time, VEB guarantees banks the return of all investments with a yield of 4%. According to Ilya Torosov, the founding documentation of the first fund is being coordinated, the creation of three more is being discussed with banks.

It is expected that the funds will make it possible to finance projects worth 2 trillion rubles, for which there are not enough funds from the initiator. As Yury Gazaryan, deputy chairman of VEB.RF, explained to Kommersant, their creation is due to the fact that “for many projects that” enter “the factory, there is a lack of equity capital, while regulation did not allow banks to participate in the equity capital of project initiators.” According to him, the funds will be refundable, but the conditions will depend on the specific project – initiatives with a shareholder return of at least 15% per annum will be considered. VEB.RF will give options to the “share” of banks in the fund, which can be presented from the fifth to the eighth year – then, says Yuri Gazaryan, “the state corporation will buy out the bank’s share and continue to implement the projects accumulated in the portfolio (this is considered a negative scenario for VEB, and its probability is low). Also, he added, there is an opportunity for VEB.RF to buy out the bank’s stake if the portfolio shows excessive profitability.

Among other concessions is the possibility of replacing VEB.RF financing with its guarantees, for example, when obtaining cheaper loans from other banks. This will free up the state corporation’s funds for other projects. The admission to the factory of existing companies is also expanding – if in 2022 the requirement for investors to create a project company was removed to modernize production facilities and “second stage” initiatives, now there is no need to form new companies for any initiatives.

RSPP told Kommersant that they support the extension of temporary measures that have proved their effectiveness, including a reduced minimum investor share to 15%, as well as the emergence of new opportunities. “We hope this will further increase the interest of companies in the factory and launch new investment projects,” the union noted.

Evgenia Kryuchkova