The Factory is a project finance mechanism for investment projects in Russia’s priority industries. The mechanism allows borrowers to obtain funding under syndicated loan (credit) agreements and raise more funds to deliver state-backed projects.

Tools to promote projects delivered through the Factory

  • Vnesheconombank’s administrative and financial support
  • Borrowers and lenders’ interest risk hedging using the Russian government subsidies
  • The Russian government targeted guarantee to reduce financing costs and mitigate risks of investors in bonds issued to finance the Factory projects
  • Special procedure for calculating Russian credit institutions’ capital adequacy ratio and creating provisions for loans and credits granted through the Factory

Factory Organization Model

Vnesheconombank
  • Factory operator
  • Selects Factory’s projects
  • Syndicate loan manager
  • Recipient of the government subsidy
Economy Ministry
  • Factory supervisor
  • Chief manager of the government subsidy
PFF SPV
  • Wholly owned by VEB
  • Issuer of government-backed bonds
  • Tranche A Lender
  • VEB commitment to buy out/substitute SPV’s distressed assets
Ministry for Finance
  • Issuer of a government guarantee and grantor of the subsidy
Factory Participants
  • Lenders: Commercial banks and global financial institutions
  • Project initiators
  • Direct Investment Funds
Central Bank
  • A special procedure to govern commercial banks relating to Factory project lending


Project Selection Criteria

Above RUB 3 bn
Project in the Russian Federation
Up to 20 years payback period
Areas and industries pursuant to VEB Strategy
≥20% sponsor’s equity investment
Borrower - project company

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