Financial instruments

Financial instruments

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.