The meeting of the Collegium of the Ministry of Economic Development of the Russian Federation considered the establishment of a project financing factory and a centre of competencies for project management of projects under the aegis of Vnesheconombank.
At the moment, the banking sector is giving up project financing (in most cases its share makes 10-15% of the portfolio) and focusing on the investment crediting of existing businesses. At the same time, in VEB project financing exceeds 90% of its portfolio, and the bank is actively developing industry expertise.
“It is important for us to attract investors at the stage of participation into the capital. Syndication will allow market participants to obtain sufficient funds for project financing. Of importance are also the interest rate subsidy mechanism, qualitative selection of projects at the very start and qualified industry expertise,” noted Chairman of Vnesheconombank Sergey Gorkov speaking at the meeting of the collegium of the Ministry of Economic Development.
The proposed project financing model envisages a syndication of 80/20, where 20% is equity capital and 80% borrowed funds, syndicated through tranches to reduce the risks for the project participants.
The operational scheme of the project financing factory involves several steps: the centre of competence performs a marketing analysis and helps in the development of the business model; the structuring centre creates the optimal structure of the transaction and the mechanism and the syndication mechanism; the monitoring centre monitoring the performance of the loan agreement and the situation on the market, and assists in updating the financial model and the business plan.
The collegium also discussed the topic of the management quality, the problem of which is a consequence of the shortage of efficient management teams, underestimation of risks, insufficient project development, failures to deliver on time and budget deficit.
“On the basis of VEB, we will create a centre of competence which will consolidate educational and consulting services. It will accumulate the most advanced knowledge on project management and the organization of production processes, provide it to the business and promote the services for the improvement of the quality of projects, - Sergey Gorkov said. - It is important to create the mechanisms that will motivate the business to increase labour productivity. These may be the standardization, certification, ranking and government subsidies to the enterprises committed to the increase of productivity.”
At the moment, VEB is changing its pattern used for working with provinces on the selection of new investment projects, introducing an institute of certified managers.
“We have changed our approach together with the Agency of Strategic Initiatives. They have a good personnel selection mechanism, and we have added our profile there and announced the contest in the provinces. These managers will make primary selection of projects in accordance with our strategy, rules and requirements. The funnel will become wider, and the time of project review will reduce by 2-3 times. Before the end of the year managers will appear in all regions,” added Sergey Gorkov.