GAGEO Asset Finance Services is pleased to announce the second closing of the GAGEO 1 fund, amounting to €85 million.
GAGEO 1 is a debt fund that provides companies with long-term financing of between three and seven years, backed by their inventory or industrial equipment. Through senior securities, it provides significant financing volumes that are guaranteed through a possessory pledge on inventory or a financial lease for equipment. It has a net investment return target of more than 4% in the class of private debt secured by real assets.
It is aimed at companies that have a strong position in their market and an attractive business model. For example, the fund supported ARC France, a world leader in tableware, with its recent debt restructurings. As of December 2020, it has €15 million in loans outstanding. In July 2020, the fund financed the women’s clothing brand New Naf Naf, which was taken over by a consortium made up of its previous supplier and management.
The European Investment Bank (EIB), Bpifrance and MIF have joined forces with Caisse Centrale de Réassurance (CCR) – the fund’s sponsoring investor – and Carac, which have increased their subscription amount for this second closing.
The EIB’s equity investment amounts to €30 million and is guaranteed by the European Fund for Strategic Investments (EFSI), the central pillar of the Investment Plan for Europe. It also comes under the emergency COVID-19 measures introduced by the EIB Group to support businesses.
Further closings are planned for 2021 to achieve the target size of €150 million.
The management company of the GAGEO fund is France Titrisation, with its experience in managing economy financing funds. The fund’s depositary bank is My Partner Bank, which has been operating in this field for more than 20 years. The legal documentation for the fund was prepared by Hubert de Vauplane from Kramer Levin. Antoine Diesbecq from Cabinet Racine assists GAGEO with legal issues relating to possessory pledges.
Bertrand Labilloy, CEO of CCR and sponsoring investor of the fund, said: “We are pleased to be supporting the financing of the real economy amid the current challenging crisis through the GAGEO fund. We were impressed by its extremely strong economic value from the outset. CCR’s investment in the GAGEO 1 fund also enables us to diversify into the secured private debt class. This is why we increased the amount of our investment for this second closing.”
Paolo Gentiloni, European Commissioner for Economy, said: “The climate of economic uncertainty caused by the COVID-19 pandemic continues to weigh on businesses. The GAGEO fund, supported by the EIB as part of its Investment Plan for Europe, provides companies with tailored, long-term financing solutions to help them weather the storm.”
EIB Vice-President Ambroise Fayolle said: “The EIB is very pleased to be supporting the GAGEO fund, an innovative fund offering a first-of-its-kind financing solution backed by the value of borrowers’ inventories. Innovation and supporting businesses is a priority for the EU bank. That is why, together with the European Commission and our financial partners, we put in place emergency support measures from the onset of the crisis to assist and respond to the needs of businesses.”
GAGEO’s President, Nolwenn Simon, and Managing Director, Jean Pierre Brice, said: “The GAGEO fund provides long-term financing of between €5 million and €20 million through senior securities – possessory pledges on inventory and financial leases for industrial equipment. Secured private debt is becoming increasingly important in major investors’ portfolios, and GAGEO specialises in precisely such asset-based lending operations.”
About asset-based lending and GAGEO
Asset-based lending is widely used in the United States, especially for inventory. However, there were no institutions in France that specialised in inventory financing, such as factoring companies for accounts receivable-based financing or leasing companies for equipment-based financing.
The GAGEO fund aims to fill this gap to help finance the real economy. GAGEO Asset Finance Services has developed specific and innovative expertise for this purpose:
- an investment process based on analysing corporate risk, including the business model and the company’s ability to achieve its business plan;
- valuation and monitoring expertise to maintain the value of inventories and industrial equipment pledged as collateral;
- significant financing volumes through two senior securities – possessory pledges on inventory and financial leases for equipment.
François Drouin is the Chair of the Supervisory Board of GAGEO Asset Finance Services.
The CCR Group is owned by the French State and has over 70 years of experience in public sector and open market reinsurance. CCR, with the guarantee of the State, provides coverage against natural disasters and uninsurable risks to insurance companies operating in France. CCR Re provides open market reinsurance services in the life, non-life and specialty lines, in France and internationally. As an institutional investor, CCR contributes to the financing of the economy and financial innovation with Gagéo, in private equity and by investing in anti-pollution funds, climate funds and impact funds.
For more information, visit www.ccr.fr.