€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.

 

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