— about why Vladimir Putin decided to increase the limits of the VEB.RF Project Finance Factory.
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During a recent speech at the SPIEF plenary session, Vladimir Putin promised to increase the capabilities of an instrument for supporting large and strategically important investment projects for the country — the Project Finance Factory. The limits will be gradually increased — at the first stage to 600 billion rubles. The attention of the head of state to the mechanism developed by VEB.RF reflects its growing importance for the Russian economy.
Today there is no other such means of supporting large businesses in the country. The mechanism can ensure the implementation of projects worth more than 3 billion rubles, with a payback horizon of up to 30 years and with a financing period of up to 20 years. With such long time periods, the Factory is interesting for business due to the compensation of part of the interest rates at a high key rate. Interest increases in proportion to the increase in Central Bank rates that we are seeing today. Over the entire existence of the mechanism, 40 projects worth RUB 3.9 trillion have been approved. At the same time, just before the end of 2024, another 30 projects worth more than 4.6 trillion rubles can be approved. With the loans provided, we can see how new production facilities and infrastructure are built. Already 9 projects have entered the operational phase, which means that production is underway, new airport terminals have become operational, traffic has opened on a new modern highway, port operation has begun, and so on.
But the Factory is a useful tool for states. If the key rate is reduced, there may be no need for government support at all. Due to this balance of interests, the mechanism can maintain an acceptable level of costs for attracting financing for long-term projects, primarily in industry, with long payback periods.
The second pillar of support for the work of the Factory is commercial banks. Their attraction is the merit of VEB.RF. The State Development Institute here acts as a consolidating force in syndication, and is also the operator of state subsidies to reduce interest payments. These three circumstances are unique for the Russian market and can significantly reduce credit risks for banks.
The demand, convenience and effectiveness of the tool for all participants have led to the fact that the demand for the mechanism significantly exceeds its capabilities. That is why it was decided to consistently increase its limits for further scaling. If they had not been increased, the mechanism's funds would now be virtually exhausted.
This is a debt mechanism that implies mandatory repayment of funds. This task can be challenging for technological development projects or urban economies. In these areas, what is planned often comes into conflict with reality, when it can be difficult to formulate a guaranteed cash flow to service debt.
And here increased limits will come to the rescue, as well as Equity Capital Funds, the creation of which VEB.RF also takes an active part. Funds can provide financing to projects directly — from the position of one of the investors or owners, and not from lenders. This allows you to multiply profitability and profitability, especially in venture technology projects, and helps implement initiatives that have difficulties servicing debt.
In this case, funds from one of the Equity Capital Funds can serve as an impetus for including the project in that the same mechanism of the Project Finance Factory. This combination of tools will allow the country to implement a larger number of complex and innovative projects that today, for one reason or another, cannot receive the necessary funding. And ultimately solve the task set by the President to achieve technological sovereignty in areas that ensure the sustainability of the economy.