For the first time, the European Commission has authorised a state aid to promote risk capital funds for SMEs operating exclusively in the agricultural sector. Italy is authorised to provide an amount of € 5 million per year until 2005 for setting up a risk capital Fund to promote investments in agricultural SMEs in their start-up or early stage phases. The Fund will take minority shareholdings and participatory loans, under the condition that private investors participate as well. The new Fund may also become a partner in other risk capital funds investing in SMEs engaged in agricultural activities. The measure shall thus facilitate the access of agricultural SMEs to risk capital funds.

Agricultural SMEs face serious obstacles in accessing risk capital funds, due to the absence of adequate information, the reluctance of the investors and banks to invest and the high costs of intermediate operations related to the "due diligence". The risk capital Fund financed through the aid will inject new equity and semi-equity capital in agricultural SMEs and will finance other Funds investing in this sector. The Fund will support, both directly and indirectly, only investments admissible under another aid scheme already approved by the Commission (N 729/A/2000), covering a range of investments compatible with competition rules applicable to agriculture. The contribution of the Fund to these investments will not take the usual form of direct grants or bank loans, but it will take the form of the acquisition of minority shareholdings, through the purchase of new shares or equities and of participatory loans. The Fund is entirely public, but its intervention is conditional upon the participation of private third parties and its decisions are made upon a commercial assessment based on a robust business plan. The precise conditions for the intervention of the fund contain aid elements both in favour of the companies invested in, and in favour of private investors who also provide risk capital.

The aid meets the criteria set in the Commission Communication on State aid and risk capital, in relation with the nature and volume of the transactions, the restriction of investments to medium-sized enterprises in their start-up or other early stages also in assisted areas and their profit-driven nature, while having a minimum impact on the level of distortion of competition.

The text of the decisions will be made available on the Internet at
http://europa.eu.int/comm/secretariat_general/sgb/state_aids/agriculture_2003.htm

Once Member States have indicated whether they want parts of the decisions deleted for reasons of confidentiality. The decision can be found under the aid number N 384/2003.