Abstract
This chapter documents the first pilot project integrating the social impact investing dimension in a large infrastructure project: the project finance for the upgrande and extension of the public hospital in Treviso (Northern Italy). The case study is a compelling example of ‘Shared Value’ highlighting the potential and limits of the theoretical framework developed by Porter and Kramer (Harvard Business Review, 89(1–2), 62–77, 2011).
Our most sincere thanks for the support of our research to Lendlease Italy, the European-funded project Dolfins, and Regione Veneto’s ULSS2 Marca Trevigiana.
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Notes
- 1.
Elaboration of the author based on interviews with Andrea Ruckstuhl (President of OG and CEO of Lendlease Italy) and Francesco Mandruzzato (CEO of OG and Head of PFI at Lendlease Italy).
- 2.
Those new solutions are not always within the legal boundaries and the reputation of PPP sector has been undermined by misdeed and financial scandals.
- 3.
Both figures are approximations due to the complexity of project finance but reflect the order of magnitude (source: Francesco Mandruzzato).
- 4.
Interview with Lendlease’s senior management.
- 5.
The financial costs of the debt are upfront fee, commitment fee and interest fee. The upfront fee charged by EIB is sensibly lower than the one of commercial banks , but the benefits were absorbed by extra transaction costs for the negotiation with EIB. The commitment fee of EIB is half of the one of commercial banks —approximately 50 basis points—making OG to realise savings from the financial closing and diminishing over time until the end of construction phase. The interest fee is 90 basis points lower than the commercial one, and realised on the actual borrowed capital over 16 years—duration of the debt repayment.
- 6.
Banca Popolare di Vicenza and Veneto Banca are bankrupt and have been sold to Intesa Sanpaolo for 1 euro each one (June 2017) with great financial loss of account holders and small investors.
- 7.
In Italy, the only financial intermediaries for impact investing with a track record and significant size are Banca Prossima (subsidiary of Intesa Sanpaolo) UBI Banca and OltreVenture (impact equity fund) with little or no support from government .
- 8.
New legislation on the reform of the third sector and social enterprise has just been approved by Parliament, but the effective outcomes are far from being definitive.
- 9.
In Italian, article 4 of OGII’s Memorandum of Understanding: ‘Partecipazione ad iniziative economiche in Italia nel settore sociale o che abbiano finalità di impatto sociale, ivi incluso a titolo meramente esemplificativo iniziative riguardanti la fornitura di servizi socio-sanitari, assistenziali, welfare, culturali o didattici ovvero di sostegno all’ambiente e al turismo eco-sostenibile’.
- 10.
Interpretation of Bonelli Erede, the law firm assisting EIB.
- 11.
Only EIB finances the impact investing vehicle, but all the banks involved in the project financing of the main project are included in the impact investing decisions.
- 12.
It is the view of Sir Ronald Cohen (Chairman of the G8 Taskforce on social impact investing ) reiterated in numerous occasions by other early impact investors such as Luciano Balbo (OltreVenture) that impact investing is a declination of venture capital applied to the social sector (Vecchi et al. 2015).
- 13.
For further information on the methodology, see https://www.he-r.it/.
- 14.
Interview with Francesco Benazzi, CEO of ULSS Treviso (Provincial NHS authority).
- 15.
In October 2017, Lendlease won the public tender to regenerate the site where EXPO Milan took place in 2015, and was awarded the concession contract to design, finance, build and manage the site for 99 years. This is a €2 billion investment project and includes a social impact investing strategy that replicates the model piloted for Treviso hospital but eight times larger.
- 16.
Italian legislation allows for ‘prestito soci’, a loan between shareholders or partners in business.
- 17.
Interview with Francesco Mandruzzato, CEO of OG and head of PFI at Lendlease Italy.
- 18.
An approximate estimate of the interest fee is around 6% (source: Francesco Mandruzzato).
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Addarii, F., Lipparini, F., Medda, F. (2018). Impact Investing Innovation: Bringing Together Public, Private and Third Sectors to Create Greater Value: The Case of the Public Private Partnership Initiative for the New Public Hospital of Treviso. In: La Torre, M., Calderini, M. (eds) Social Impact Investing Beyond the SIB. Palgrave Studies in Impact Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-78322-2_5
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