The financial support from the RDP is based on an assessment of the market and public investment, as set out in EU Regulation 1303 of 2013 (Article 37(2)).
The “ex ante evaluation report on financial instruments” for the Puglia RDP was prepared in January 2017 by Lattanzio Advisory and was adopted by the Managing Authority in February 2017. Strategic guidelines have been defined for the following instruments:
- An “uncapped” guarantee fund, managed by the European Investment Fund (EIF), will allow beneficiaries of the supported measures to receive from selected financial intermediaries loans guaranteed at 50% by the EIF, without any cap for intermediaries at portfolio level, and with transfer of the benefit of the guarantee (in terms of lower interest rates or lower guarantees required);
- A “first call” guarantee fund shall be set up for the entities in the ranking lists admitted to calls for proposals under sub-measures 4.1, 4.2 and 6.4 and managed by a body governed by public or private law selected in compliance with the rules on State aid and public procurement;
By Decision C(2017) 3154 of 05 May 2017, the European Commission approved the amendment to the Rural Development Programme of the Apulia Region and introduced support with financial instruments.
The Regional Council, within the framework of the EIF instrument “Agri Italia Platform”, approved by Resolution no. 1829 07 July 2017 the financing agreement scheme (Funding Agreement) between the Regions belonging to the multiregional Platform and other institutional investors (European Investment Fund, European Investment Bank, Cassa Depositi e Prestiti S.p.A).
In line with the ex ante analysis and the overall programme strategy, the Managing Authority (MA) of the Puglia RDP has entrusted the EIF with the fulfilment tasks provided for in Article 38(4)(b)(i) of Regulation (EU) No. 1303/2013 for the implementation of a Regional Fund of Funds (RFF). The objective of the fund is to facilitate access to finance in the agricultural and processing sector, with an unlimited portfolio guarantee (“uncapped guarantee”) in support of investment projects provided for and under sub-measures 4.1 (support for investments in agricultural holdings) and 4.2 (support for investments in the processing, marketing and development of agricultural products). The guarantee covers 50% of the risk of loss on loans granted by the financial intermediaries selected by the EIF. The use of this financial instrument is possible thanks to the participation in the guarantee risk by the EIB Group (EIF and EIB) and other investors, including Cassa Depositi e Prestiti S.p.A., which – with a contribution at least equal to the payment of each MA – undertake to bear the “senior” losses.
The financial contribution of the Puglia Regional RDP, amounting 10 million euros, covers the risk of the “junior” tranche (first losses) of the instrument.
The financial instrument provides for a leverage effect with respect to the net financial contribution paid by the MA equal to the sum multplied by 4, in accordance with Article 42 (1) (b) of Regulation (EU) No. 1303/2013.
Depending on the Funding Agreement and the riskness of each portfolio, it is possible to achieve a higher target leverage. For the Puglia RDP the value is equal to the sum multiplied by 6.
The investment strategy foresees the selection by the EIF of the financial intermediaries to provide the financing and its inclusion in the portfolio guaranted by the FdF. The entity may obtain favourable terms, including lower interest rates or lower guarantees.
The management of the Regional guarantee instrument “on first demand” has been entrusted, according to Article 38 (4) (b) (iii) of EU Reg. 1303 of 2013, to two Confidi registered in the single register of financial intermediaries supervised by the Bank of Italy (Article 106 of the Consolidated Banking Act). The Determination of MA No. 168 of 04 September 2017 established the “Regional RDP Guarantee Fund on first demand” and initiated the negotiated procedure (pursuant to Article 36(2)(b)) at fixed cost (Article 95(7) of Legislative Decree No.50 of 2016) to identify the entities entrusted with the service of managing the Fund, amounting to EUR 3 million. The final award was made by Decision no. 21 of 17 January 2018. The Fund provides for the sharing of 500,000 euros of private capital of the Confidi.
The subjects amitted to the technical-administrative investigation phase of the calls for submeasures 4.1, 4.2 and 6.4 of the Apulia RDP may submit to the Confidi the request for the issue of the bank loan guarantee necessary to guarantee partial or total coverage of the private share necessary for the full financing of the project. The Confidi, on the basis of the rating model of the recipient of the loan, will have to identify the minimum annual percentage premium provided for in the Communication of the European Commission (OJ C 155 of 20 June 2008), to be applied on the amount guaranteed by the financial instrument.
Article 42 (1)(b) of Regulation (EU) No. 1303/2013 states that the eligible expenditure shall be the total resources set aside for each guarantee issued by the Fund during the period of eligibility of expenditure to cover the risk of expected and unexpected future losses. The amount is determined as the sum of the initial value of the provision for each guarantee, including current and expired contracts. The provision for each guarantee given (expressed as a percentage of the value of the guarantee), defined on the basis of a prudent ex ante risk assessment and reference market conditions, is 16.66%. The application of the provision percentage, according to Article 8 of Regulation (EU) No. 480 of 2014, is equal to a coefficient multiplying the amount of the RDP contribution to the fund and the total value of guarantees issued, equal to 6 (six). The value of the multiplication coefficient is also the operating index of the Confidi for the calculation of the result remuneration.