€1.2 Billion to Support Italian Companies with Eib Group-illimity Agreement under European Guarantee Fund (EGF)

Banking
09.12.2021 02:45 pm

• €60 million EIB guarantee to support illimity to unlock new liquidity for companies by financing working capital, via reverse factoring for over €1 billion in turnover

• €150 million EIF guarantee to support illimity mobilise €215 million in new financing

The EIB Group — comprising the European Investment Bank (EIB) and European Investment Fund (EIF) — and illimity Bank S.p.A (“illimity” or the “Bank”) have signed two agreements to provide new liquidity to Italian small and medium-sized enterprises (SMEs) to help them meet the challenge of the post-COVID

19 recovery. The aim of the agreements is to unlock financing of over €1.2 billion under two EIB Group guarantees totalling €210 million.

This financing has been supported by the contribution of the European Guarantee Fund (EGF), part of the European Union's €540 billion package of measures to address the economic difficulties and production slowdowns caused by the coronavirus pandemic.

Gelsomina Vigliotti, Vice-President of EIB, commented: “The EIB together with illimity continues to support the economic recovery of Italian companies hit hard by the economic crisis caused by the pandemic. The Association for Financial Markets in Europe estimates that SMEs have lost between €450 billion and €600 billion due to the pandemic. Via the European Guarantee Fund (EGF) — which was specifically created to address the consequences of the crisis — the EIB is providing businesses (particularly SMEs) with the liquidity they need to ensure business continuity while paying employee salaries and supplier bills. Italy is among the main beneficiaries of EGF funds to date.”

Alain Godard, CEO of EIF added: “Small and medium-sized enterprises are the engine of the European economy and supporting their growth and development is our priority. The European Guarantee Fund is proving to be the right tool for meeting this objective, providing the liquidity needed to support SMEs' medium to long-term investment requirements."

Corrado Passera, CEO and Founder of illimity concluded: “illimity was created to enhance and support the potential of SMEs and we are therefore delighted with the agreement signed with the EIB, which will enable us to go even further help businesses, especially for supply chain financing. In these unprecedented times, finance has a great responsibility to the business world and illimity intends to make its contribution using all the tools at its disposal.”

EIB-illimity operation

With a €60 million EIB guarantee financing working capital for over €1 billion in turnover, the EIB-illimity operation will provide new liquidity to companies by financing working capital via reverse factoring products, specifically focused on the supply chain. Companies will be able to collect their trade receivables in advance, thanks to illimity's intervention.

In concrete terms, illimity will provide suppliers with early payments in line with their financial needs, thus reducing the risk of interrupting their supply chains and improving their working capital position.

The European Guarantee Fund will allow illimity to further invest in the financial instruments available to Italian supply chains, increasing both the loan amounts and the number of companies involved. The EIB Group guarantee will cover up to 75% of illimity's exposure to buyers for three years.

EIF-illimity operation

The European Investment Fund (EIF) will provide a €150 million guarantee to illimity, enabling it to originate a €215 million portfolio of financing for small and medium-sized enterprises. Access to credit will be supported on favourable terms for Italian SMEs exposed to the pandemic crisis, thus safeguarding employment levels.

The EIF guarantee under the EGF will cover up to 70% of illimity's exposure to these new loans to SMEs.