Italy’s Government led by Premier Matteo Renzi approved the socalled “Investment Compact” bill last January 20th evening (download here the press release) which provides measures that will give the country’s biggest 10 cooperative, or “popolari” banks 18 months to change their ownership structures and become an spa (current rules allow every shareholder to have one vote, regardless of the size of their investment).
Moreover the bill introduces some impacting measures facilitating investments in Italy’s SMEs.
One of these is the creation of the category “Innovative SMEs”, that would benefit of certain simplifications and fiscal incentives as innovative startups already do (see here a previous post by BeBeez). More in detail, investors in innovative SMEs whould be allowed to access the same specific fiscal incentives as they do when invest in innovative startups. Moreover Italy’s equity crowdfunding platforms might be intitled to publish offerings from innovative SMEs too.
Another breaking news is the go-ahead with the creation of a new investment company aiming at investing in Italy’s struggling companies which still have a good chance to recover their business. The newco will be capitalized by institutional investors and some of the shares might benefit of Italy’s Government guarantee.
Government-controlled SACE will be also entitled to act as a bank and issue credit facilities to Italian companies (till now SACE just issued guarantees on export credits to Italy’s corporates) while foreign and Italian credit funds won’t pay anymore the 26% witholding tax on interests and profits coming from credit lines issued directly to Italian companies even if those funds are leveraged (till now the fiscal incentive had been awarded just to EUheadquartered funds which were unleveraged).
Finally, direct lending to companies by non-banks operators has been enlarged to leveraged funds. Since the introduction of Law Decree 24 June 2014 no. 91, Italian companies have access to an additional source of financing as the decree allows Italian securitisation special purpose vehicles (SPVs), insurance companies and closed-end investment funds to provide finance directly to borrowers provided certain conditions are met (see here a previous post buy BeBeez).
However that practice was limited to funds that did not use leverage so that the majority of international private debt operators weren’t able to benefit from that law. “Investment Compact” introduces instead a measure that opens up direct lending activity to all kind of funds, including the leveraged ones.
Some other long-awaited measures however had not been included in the bill but should be included in some other bills coming next.
First of all there is no word about the announced “Contract for the certainty of the regulatory framework” of large productive investments (over 500 million euro for yearly amounts not less than 100 million). The idea was to provide a measure aiming to prevent regulations that would retroactively have a negative effect, starting from the fiscal regime to the authorization procedures.
Moreover the bill does not say a word about the announced introduction of so-called “Industrial Bonds” that could be issued by SMEs networks established as legal entities with the same taxation that is applied to government bonds in order to finance specific investment industrial projects
Finally the bill does not enlarge yet Central Guarantee Fund‘s activity to asset backed securities’ mezzanine tranches. The fundwhich is funded by the Ministry of Economy and Finance, has been guaranteeing banking facilities to Italian SMEs for years. Now the idea was to allow the FUnd to guarantee abs mezzanine tranches too when those abs came from securitizations collateralized by SMEs loans. A move that would have paved the way for the purchase by the ECB of the abs mezzanine tranches so long as they have the state’s guarantee.