BNP Paribas Investment Partners closes €500m raise for new SME-focused alternative credit fund.
BNP Paribas Investment Partners, the bank’s asset management arm, has hauled in €500m to launch its new European SME Debt Fund. The money comes from a range of European institutional investors, including a number of insurers and pension funds. These investors include AG2R La Mondiale, BNP Paribas Cardif, CNP Assurances, l’ERAFP, Federal Finance Gestion (on behalf of Suravenir), La France Mutualiste, Groupama, MACIF, MAIF, Pensio B OFP and the BNP Paribas Group. The European Investment Fund has also invested in the fund.
The fund will invest in small and medium sized businesses across Europe through a solution which entails both bank lending and fund financing. The solution combines a medium term bank loan (with a term of around 5 years) with a long-term loan provided by the fund (with a term of 7-10 years).
The fund will focus mainly on senior secured debt, with loan origination sourced mostly via “privileged” access to the SME debt deal flow of BNP Paribas’ European banking network. We’re told that the €500m will be deployed across some 100-150 SME and small mid-caps.
“We are very pleased to have completed a successful fundraising, reaching our target level of €500 million at first close,” said David Bouchoucha (head of institutional) and Laurent Gueunier (head of alternative debt management) at BNP Paribas Investment Partners. “This confirms the strong interest from investors in an asset class that offers a compelling investment opportunity. SME debt has a low default risk, a high recovery rate and enables investors to diversify their credit portfolios, while for insurers; it has the additional benefit of an attractive Solvency Capital Requirement risk-return profile. This success is testament to BNP Paribas Investment Partners’ long experience of private debt, having been present in the market since 2001 and playing a leading role in establishing market standards for private placements.”
BNP Paribas says that the fund’s focus on long term financing makes it complementary to traditional bank loans. The European SME Debt Fund has “European Long Term Investment Fund (ELTIF)” status – and must therefore adhere to the investor protection rules which were laid down by the European Council in April 2015 with the creation of the ELTIF structure.
“The EIF has contributed to the conception and final close of the €500 million BNP Paribas European SME Debt Fund,” said Pier Luigi Gilibert, chief executive of the European Investment fund (EIF). “The Fund aims to channel institutional investors' resources towards the financing of European enterprises, with a focus on France, Belgium and Italy. It accords with the EIF's role and strategy, as well as the purpose of the EREM (EIB Group Risk Enhancement Mandate) to enhance access to finance.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.