Portugal’s development bank suffers 10% fall in Strategic Recapitalisation Investments

Investments foreseen for the Banco Português de Fomento’s (BPF) Strategic Recapitalisation Programme have fallen 10% on what had been expected at the start of November.

Several companies have pulled out of the programme, with downward revisions to the amounts invested. Nevertheless, some new companies have adhered to the programme.

To date, the use of the programme’s funding stands at 68.6% according to a report by the online news source ECO.

According to the latest information, the list of end beneficiaries for the programme, Fitness Up Group, Qualhouse, Travel Store and Elasticek left the programme despite having their recapitalisation programmes approved, which wavered between €9.9 million and €243 million.

The first three had left in November, 2023, but on the updated list on December 29, Elasticek founded by João Rafael Koehler had also left despite having been offered €9.9 million.

Tighter conditions were among the reasons why some companies quit the programme. The conditions for investment, particularly to do with spreads, had been changed between the time the investment had been approved and the contract had to be accepted.

Moreover, with negotiations being long and drawn out, the loans with the bank were no longer competitive compared to similar loan packages offered by regular commercial banks that offered better conditions.

Furthermore, the loans that involved public funds, as was the case with the Capitalisation and Resilience Fund (FdCR) — monies that originated from EU funding for Portugal’s Recovery and Resilience Fund – now have obligations and conditions attached that make the terms of the investment unattractive.

An example of a company that had rejoined is Riopele which left the list in November only to rejoin again in December after renegotiating more favourable conditions. That said, the company had not yet signed a contract despite submitting its application for funding 20 months ago.

At the start of November, the list of beneficiaries from the programme involved 20 companies vying for a total investment of €152.3 million. Now the list has 17 companies with a total investment of €137.2 million. In other words a fall of 10%.

The Strategic Recapitalisation Programme has a total investment amount available of just over €200 million, with the vast majority of investment packages from a private investor with a minimum 30% investment ratio matched by a maximum 70% investment from the FdCR fund.

At present, the number of applications, both under analysis and those already approved for the programme, exceed the total €212 million available for allocation by 321%.