Between July 2021 and June 2022, Italian SMEs collected €5.18 billion thanks to alternative finance, with a growth of 22.5 percent from €4.23 billion in the 12 months calculated at the end of June 2021, when, however, the growth rate had been as high as 58 percent, compared to €2.67 billion in the 12 months calculated at the end of 2020.
In any case, the trend is positive, especially that of the first half of 2022 with €2.6 billion of resources raised (+32%) from the first half of 2021, a year that saw a total collection of €4.5 billion, up from €3.2 billion in 2020. A growth that has particularly involved debt instruments (direct lending and minibonds) at the expense of equity, has experienced more difficulties.
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The report looks at seven forms of alternative finance to bank credit
That is what emerges from the 5th Research Notebook on Alternative Finance for SMEs in Italy, prepared by Prof. Giancarlo Giudici, full professor at the School of Management of the Politecnico di Milano and Scientific Director of the Crowdinvesting Observatory. The notebook was presented in Milan on the occasion of the Alt-Finance Day – The Alternative Finance Day, organized by Innexta, in collaboration with the School of Management of the Politecnico di Milano, Milan Monza Brianza Lodi Chamber of Commerce and Unioncamere Nazionale, of which BeBeez was media partner. Stefania Peveraro, editor-in-chief of BeBeez, also led the panel discussion with insiders From equity crowdfunding to stock market listing, which had as guest speaker Hon. Giulio Centemero (Lega), a member of the House Finance Committee, who gave interesting updates on the state of parliamentary work on private capital support, as well as news on the tax discipline of carried interest.
As always, the report looks at seven forms of alternative finance to bank credit: minibonds; crowdfunding; invoice trading; direct lending; ICOs; early-stage and expansion-only operations of private equity and venture capital; and listing on stock exchanges on specific lists for SMEs, such as Euronext Growth Milan.
That of minibonds, it was said, is the segment that has been hottest in the 12 months to June 30, with a counter value placed of €836.5 million, including €277.5 million in the second half of 2021 and as many as €559 million in the first half of 2022, with 65 issuers entering the market for the first time in the first six months of this year. This is a trend that continued even until at least the end of August, as also noted by BeBeez’s Report on 8 Months of Private Debt and Direct Lending 2022, which mapped minibond issuances of about €660 million spread over 144 issues in the period, compared to about €1.1 billion in all of 2021 on 197 issues, including in the account the minibonds underlying the basket bonds.
Similarly, the Polytechnic Report showed an increase in the weight of direct lending in the 12 months to June 30, with an estimated €1.2 billion in loans, for a trend growth of 55 percent. Recall that the Polytechnic also includes in this category financing with securitizations coming through some fintech platforms such as Credimi and Opyn, while BeBeez in its reports looks at pure direct lending, that is, direct non-bank financing, while separating securitizations into separate category.
In any case, the trend emerging from the Polytechnic data was confirmed by the BeBeez data, although at the overall level there was instead a slowdown for the broader private debt market (in addition to minibonds also bonds larger than €50 million, direct lending, purchases of performing loans, securitizations of trade receivables, loans or bonds of SMEs on fintech platforms or not, lending crowdfunding campaigns) at €13.4 billion in total, thus half of the €26 billion of investments in 2021, a year in which there was a real boom in activity, vs. 13, 1 billion in transactions in all of 2020, when there had also been a clear increase in the size of the market, from just under €12.2 billion in 2019. And if corporate impaired loan purchases are also taken into account, the 2022 bill remains at €15.6 billion, while in all of 2021 it had reached even more than 29 billion.
Going back to the Polytechnic’s data for the 12 months to June 30, these do not take into account for 2021 the issues that were subscribed under Invitalia’s Fondo Patrimonio PMI program, a measure that supported, during the pandemic period, the capitalization of SMEs that made a risk capital increase, through co-investment by Invitalia in newly issued bonds or debt securities. The Polytechnic Report states that a total of 154 Italian SMEs benefited from the measure between 2020 and 2021, with a total value of €264.5 million. Given the standardized (and subsidized) conditions on the interest rate, however, are minibond issues were not considered in the statistics.
Another interesting topic is that of funding on crowdfunding platforms, where there was an important difference in trends between lending and equity platforms. On the first front, in fact, there were lending campaigns that collectively raised €185.6 million in the period between July 2021 and June 2022 (of which €95.9 million in the first half of 2022, +26% from the second half of 2021), while equity campaigns in the 12-month period raised €141.9 million, with a trend decline in the last six months of 10% (with a collection of €59 million) linked to economic uncertainties and fears of a future recession. Again, the trend has been confirmed in recent months: according to CrowdfundingBuzz data, in the first six months of 2022 equity crowdfunding platforms raised €53.78 million, compared to €172 million for the whole of 2021, and between January and September 2022 platforms only raised a total of €112 million, including investment vehicles and real estate platforms, which for their part instead indicated an upward trend with a collection of more than €41 million and thus to date has essentially reached that of the whole of 2021.
As for the funding brokered by fintech lending platforms to SMEs, BeBeez calculated that between January and June 2022 they brokered more than €2.8 billion in loans, in the vast majority of cases in the form of securitization notes. This compares with the €3.3 billion intermediated in 2021 and brings the total intermediated by lending platforms to about €11 billion.
“SMEs face significant challenges in an economy characterized by the risks of over-indebtedness, unstable commodity and energy costs, rising rates, and criticality in raising new finance. The differentiation of sources of financial supply can become a necessity in this context, and it is important that companies are ready to seize the opportunities offered by innovative finance,” commented Andrea Prete, president of Unioncamere.
Milan Monza Brianza Lodi Chamber of Commerce President Carlo Sangalli said, “In a long phase of economic crisis like the one we are going through, the system of micro, small and medium-sized enterprises is particularly penalized by the uncertainty of the general framework and the credit crunch. Complementary finance, on the other hand, represents an important alternative for SMEs to overcome critical issues. It is a tool in the development phase but with great potential for growth. As a chamber system, we are doing an important job of information, training and dissemination of value-added services, with the aim of transforming alternative finance into everyday, ordinary finance for all businesses.”
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First published in Be Beez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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