The two major players in SME financing in France, CDC Entreprises and OSEO, and the European Investment Bank (EIB), the bank promoting European objectives, are joining forces to support high-potential small and very small enterprises at the development or buy-out stage by means of an innovative vehicle called “Avenir Entreprises Mezzanine” (AEM).
The EUR 60 million provided by CDC Entreprises, OSEO and the EIB will enable the investment fund “Avenir Entreprises” to play an enhanced role in SME financing.
Specifically, AEM will issue convertible bonds worth between EUR 50 000 and EUR 300 000, generally with a maturity of eight years and redeemable in one or several instalments. The attraction of this mezzanine instrument for businesses is that it is similar to quasi-equity, so enabling them to fund themselves while maintaining their debt capacity and strengthening their balance sheet. Avenir Entreprises will develop a new product aimed at better meeting the financing needs of small and very small French companies with a turnover of less than EUR 50 million.
Avenir Entreprises will strengthen its regional presence by means of this new financial product (which will be distributed through OSEO’s network), in confirmation of its commitment to energising France’s economic fabric, with the help of two major French (CDC) and European (EIB) lenders.
This first such operation in France will enable the EIB – the EU’s financing institution, whose priorities include SME support – to meet the needs of small firms more closely. “The European Investment Bank puts SME financing at the heart of its activities and has launched a Europe-wide consultation aimed at improving the financing instruments to support small businesses. This operation mounted along with OSEO and CDC Entreprises provides an example of the kind of innovative financing that can be developed in Europe. I welcome the fact that we are able to carry it out in France” said EIB Vice-President Philippe de Fontaine Vive.
Owned by CDC Entreprises and OSEO, Avenir Entreprises has been making equity investments of up to EUR 2 million in French SMEs for more than 20 years. It has supported over 500 firms and is part of the “France Investissement” facility.