The asset management arm of the European banking giant is planning a substantial expansion into the SME lending space with plans to lend more than €1bn per year across Europe.
BNP Paribas Asset Management has expanded its SME Alternative Financing franchise with a new strategic partnership with SME lending platform Code Investing.
Formerly an equity crowdfunding platform called Crowdbnk, Code - which has to date lent mainly in the mini bond space - will be an origination partner to BNPP AM with the platform providing direct lending access to unsecured SME loans of between £500,000 and £5m.
Code says it has facilitated £47m in lending through its platform to date, although much of this cash was raised as mini-bonds, according to documents seen by AltFi. The platform also appears to have facilitated a further £41m from legacy equity raises before its pivot to debt, according to the same documents.
Stephane Blanchoz, Head of SME Alternative Financing at BNP Paribas Asset Management says the way SMEs access financing is undergoing a structural shift.
“As BNPP AM expands its SME lending capability in the UK and in Continental Europe, the partnership will be key in originating loans to enable us to provide clients with an attractive investment offering,” he said.
Blanchoz, speaking exclusively to AltFi last month, said the firm was looking to build up to lend up to €1bn per year across year, partly through origination partnerships.
The ticket sizes BNP AM is targeting are above the average loan levels offered by Funding Circle but below those offered by the increasingly competitive private debt fund world. Several commentators believe this market to be something of a sweet spot.
Larger tickets offer the chance to scale quicker and institutional demand is strong but few platforms are yet to fully establish themselves in the £500k-££5m range. Thin Cats, acquired by ESF capital in 2016, and SME Capital are two notable platforms attempting to do so.
Ayan Mitra, CEO and Founder of CODE Investing says Code aims to make funding for SMEs easier and more streamlined with institutions increasingly interested in exposure to the asset class.
“With our emphasis on institutional – rather than retail – lenders we believe CODE’s marketplace will ultimately be able to provide SMEs with an aggregate view of financing available to them in the market,” he said.
"Our institutional partners are able to directly access SME debt more efficiently and in greater volume without compromising their internal lending preferences and credit criteria,” he added.