France: Juncker Plan - the EIB Group provides an initial guarantee of EUR 50 million to the new Eiffel Croissance Directe fund
Corporate finance specialist Eiffel Investment Group announces the official launch of Eiffel Croissance Directe, in the presence of Benjamin Griveaux, Secretary of State at the Ministry of the Economy and Finance, and Ambroise Fayolle, Vice-President of the European Investment Bank (EIB), along with the Directors General of AG2R LA MONDIALE and BRED, who all participated in setting up this innovative tool for financing growth SMEs.
In the days running up to the official launch, the fund already financed five French SMEs for amounts ranging from EUR 1m to EUR 5m. It aims to carry out up to 100 similar operations in the next few years. The current commitment of EUR 115m is expected to be increased to EUR 300m in 2018.
The cornerstone investor is AG2R LA MONDIALE, which has committed EUR 100m. BRED is also a partner in the fund. For its launch, the EIB Group is providing an initial guarantee of EUR 50m via its subsidiary the European Investment Fund (EIF). EIB Vice-President Ambroise Fayolle stressed that: “this new fund is the fruit of an unprecedented partnership between the French public authorities, the private sector and the European Union”.
“We are particularly proud of this fund, whose first developments are very encouraging” said Fabrice Dumonteil, CEO of Eiffel Investment Group. “The feedback from companies is highly positive and the first operations are helping to fuel this enthusiasm”.
The Eiffel Croissance Directe fund is the product of an innovative partnership between national public and EU entities and front-rank private institutions. In order to address an unmet financing need directly reported by SMEs to DIRECCTE Île-de-France, Eiffel Investment Group was entrusted with setting up the fund after winning a call for expressions of interest in January 2017.
Designed to complement existing financing facilities, this tool is marked by its operational flexibility and speed, which are particularly geared to growth firms with high potential. It offers loans starting at EUR 1m with maturities of up to ten years, with or without a grace period. It is able to finance intangible investment (recruitment, etc.) and can operate in all economic sectors, as demonstrated by the first loans granted. Whether software, ready-to-wear or service companies, a common feature of the firms financed by the fund is that they create jobs and seek flexible financing solutions tailored to their rapid growth.
Its original sourcing network, which for the most part relies on local work by DIRECCTE Île-de-France's representatives, BRED Banque Populaire's regional divisions and its optimised investment process, means that the Eiffel Croissance Directe fund is able to quickly identify and respond to the financing opportunities it receives. Operational since June 2017, the fund has already received almost 150 investment projects, and made its first investments from July onwards. It hopes to finance up to 100 French SMEs for a target amount of around EUR 300m.
Eiffel Investment Group is already very active in financing small businesses (for example, its Alto Invest subsidiary has provided equity financing to more than 200 innovative SMEs, while its Prêtons Ensemble online lending fund already has exposure to more than 10 000 loans to French and European micro-enterprises). The new Eiffel Croissance Directe fund will complement its existing range in a segment (growth SMEs with turnover of between EUR 5m and EUR 100m) that is often poorly served by traditional financing players, particularly because of the costs connected to analysing these small-scale applications. However, SMEs account for the majority of added value and job creation potential on the ground. By actively targeting these businesses, Eiffel Investment Group will be able to build up a highly diversified portfolio aiming to provide Eiffel Croissance Directe's investors with an attractive return whilst keeping risk well under control.
Eiffel Investment Group's main partner for this fund, AG2R LA MONDIALE, has undertaken to invest EUR 100m of the EUR 300m that the management company expects to raise overall. BRED Banque Populaire is a co-investor, participating actively in the identification of borrowers and the implementation of joint bank-fund financing.
A second fund closing is planned for the end of the year.
New Juncker Plan financing
This new fund also benefits from an EU guarantee via the European Investment Fund (EIF), an EIB subsidiary, with a view to facilitating access to financing for innovative companies while also attracting further investors under the European Commission's InnovFin SME Guarantee Facility programme and the Investment Plan for Europe (commonly known as the Juncker Plan). Innovation and supporting companies are EIB Group priorities. The Juncker Plan is continuing to make progress in France, with a current total of 89 operations approved by the EIB Group totalling more than EUR 7bn in financing. With this EIF transaction, the EIB Group is once again lending its support to Eiffel Investment Group, to which it has provided a total of almost EUR 100m in financing.