On behalf of the Italian Government – Department of Economic Development, the National Innovation Fund was created to fund Italian innovative SME’s via structured securitization techniques
In the midst of a harsh financial crisis and of a general credit crunch situation IPI, the technical agency of the Italian Department of Economic Development decided to set up an innovative government grants scheme for Small and Medium Enterprises in order to fund firms intending to commercially exploit patents and trademarks.
The National Innovation Fund (NIF) was meant to be an innovative funding instrument that intended to reward SME’s investing in patents and trademarks via debt capital and leveraging the risk mitigation techniques embedded in the tranched cover securitization methodology, recently provided for by the Basel Committee’s New Capital Accord of June 2014.
The final goal of the NIF scheme was to provide government grants to eligible banks that they could use to issue lower-interest-rate loans to SME’s that were better rated by the bank. For the very first time in Italy, the idea of a loans portfolio to SMEs’ was being introduced in a government grants’ scheme and securitizations techniques were for the first time adopted for such purposes.
The government grants scheme, which included a cash collateral provided to the banks of about € 40 million, allowed eligible banks to issue loans in the amount of € 375 million.