By Giuseppe Fonte and Elisa Anzolin
ROME (Reuters) - Italy plans to launch a fund worth up to 40 billion euros ($47.8 billion) this month to help its companies hit by the coronavirus crisis raise capital and strengthen their balance sheets, two sources familiar with the matter said.
The so-called "Patrimonio Rilancio" is a special purpose vehicle (SPV) to be financed by the Treasury via specifically issued sovereign bonds and managed by state lender and equity investor Cassa Depositi e Prestiti (CDP).
The 170-year-old CDP, which the Treasury controls with an 83% holding, is playing an increasingly active role in Italy Inc to keep strategic assets in national hands and mitigate the economic damage caused by the pandemic.
Taking advantage of the European Union's more flexible approach to state aid in the face of the COVID-induced recession, the fund will invest in non-financial Italian companies with revenue above 50 million euros, over the next 12 years.
To give the CDP financial backing, Rome will issue up to 40 billion euros of sovereign bonds in several tranches, increasing a public debt pile which already equalled 155.6% of national output at the end of last year, a post-war Italian record.
The timing of the bond issuance will track the fund's capital injection deals, the two sources said. The size of the initial tranche will be set out in a decree now being drafted by the Treasury, they added.
The scheme allows the CDP to help companies in severe financial difficulty. It can do this through capital injections, bonds convertible into shares or risky subordinated debt, which ranks below senior debt when it comes to repayment.
Italy's economy shrank by 8.9% in 2020, the steepest annual recession since World War II. Curbs on business to contain the coronavirus continue to undermine recovery prospects.
This week the country became the seventh in the world to register more than 100,000 COVID-related deaths.
Dozens of companies with revenue of up to 500 million euros have already expressed interest in applying for the Treasury-sponsored scheme, focusing on convertible bonds and subordinated debt as preferred options, one of the sources said.
The companies, most of which are not listed, operate in sectors spanning agri-food, manufacturing, media, the automotive supply-chain and internet technology, the source added.
CDP may also use the fund's resources to support healthier companies alongside private investors on ordinary market terms, and buy stakes in listed companies deemed of strategic importance, according to the government's plan.
($1 = 0.8359 euros)