BNP Paribas unit closes €500m SME debt fund

BNP Paribas Investment Partners, the asset management arm of the French bank, is targeting Europe with its combination of bank lending and fund finance.

BNP Paribas Investment Partners has announced the €500 million final close of its BNP Paribas European SME Debt Fund.

The fund will target small and medium-sized enterprises in Europe with a solution that combines bank lending and fund financing.

Investors in the fund include AG2R La Mondiale, BNP Paribas Cardif, CNP Assurances, l’ERAFP, Federal Finance Gestion, La France Mutualiste, Groupama, MACIF, MAIF, Pensio B OFP, BNP Paribas Group, and the European Investment Fund.

The fund combines medium-term bank loans of about five years with a longer-term loan provided by the fund of between seven to ten years. Investments will be mainly in the form of senior secured debt and origination of deals will be mostly through BNP Paribas’ European banking network. Between 100 and 150 SMEs and small mid-cap companies are expected to receive backing.

The fund has European Long Term Investment Fund (ELTIF) status, which is granted to funds which provide long-term financing to unlisted companies, SMEs and infrastructure projects. Among other possible benefits, ELTIFs offer favourable treatment under Solvency II insurance regulations.

“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,” said David Bouchoucha, head of institutional, and Laurent Gueunier, head of alternative debt management, in a joint statement.

BNP Paribas Investment Partners is the asset management arm of BNP Paribas Group and covers sovereign debt, currency, investment grade & high yield credit, structured securities and alternative debt. It has more than 180 investment professionals in Paris, London and New York.