The credit “factory” will be rebuilt – Newspaper Kommersant No. 211 (7412) dated 11/15/2022

The White House has updated the rules for concessional lending to large projects – “project finance factories” – expanding the opportunities for investors to participate in this program. The requirements for the minimum share of own funds in the project have been temporarily reduced – from 20% to 15%, projects of existing companies, and not just specially created ones, as now, are allowed to be financed. At the same time, the limit on the amount of tranches provided by VEB.RF was increased from 294 billion rubles. up to 500 billion rubles. Business representatives welcome the increase in the availability of “factory” mechanisms, especially for those who do not have sufficient free liquidity under the sanctions.

The government approved a regulation expanding the use of the project finance factory. As Prime Minister Mikhail Mishustin explained yesterday at a meeting with his deputies, the changes are aimed at reducing the burden on investors in the implementation of large investment projects and at mitigating the effects of sanctions. Recall that the “factory” involves the attraction of VEB.RF syndicated loans for large projects from 3 billion rubles – borrowed funds account for up to 80% of the project cost, the rest must be invested by the investor from his own funds. Borrowers are guaranteed unchanged preferential rates (depending on the key rate of the Central Bank) in the long term. Projects worth 750 billion rubles have already been financed, plans for another 4 trillion rubles are under consideration. The reconfiguration of the “factory” was announced by the Ministry of Economy in early November as part of a package of support measures to stimulate investment activity (see Kommersant of November 7).

The updated rules involve softening the requirements for investors: not only projects from scratch, but also those that are being implemented by existing legal entities without forming a new company, will be able to participate in the program. We are talking, for example, about the construction of the second stages of projects, about the expansion and modernization of production facilities. In addition, the minimum share of project co-financing at the expense of investors’ own funds has been reduced for 2022–2023 from 20% to 15%. At the same time, if the investor’s share in the project is reduced, the share of VEB.RF will be reduced from 40% to 25% of the project cost (excluding interest on loans). Thus, the share of bank financing within the syndicate will increase.

At the same time, the amount of financial support from VEB.RF within the framework of “tranche A” is also increasing. To clarify: the syndicated loans of the “factory” are divided into several parts (tranche “A” is issued by VEB.RF, tranche “B” – by banks and VEB). Previously, the limit of VEB.RF within tranches “A” was 294 billion rubles, now it is being increased to 500 billion rubles. As Yury Korsun, deputy chairman of VEB.RF, explains, “the previous limit was due to the size of state guarantees, which ensured the attraction of liquidity in the bond market by a specialized project financing company (SOPF); the requirement for the mandatory transfer of tranches “A” to the balance of the SPF is now excluded. This approach will allow serving more projects and larger initiatives – in development of the decision to allocate 120 billion rubles to the “factory”. from the National Wealth Fund to increase the volume of lending to projects by at least 500 billion rubles.

According to Natalia Safina, Head of Macroeconomic Analysis and Financial Markets at the Center for Strategic Research, reducing the threshold for the share of an investor’s own funds will reduce the initial burden on him by 25%. “In conditions of increased uncertainty, this can play a significant role in favor of the decision to launch a promising project,” the expert says. The business community also agrees with this. As the RSPP explained to Kommersant, the easing could make the “factory” more accessible to companies that have suffered the most from the sanctions and do not currently have an adequate supply of free liquidity. The possibility of access to the mechanism for existing companies in the association is called “an important and timely change”, since the requirement to create a separate legal entity for the project reduced business interest in this tool.

Evgenia Kryuchkova