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European private placement guide launched

The document aims to support the development of a distinct European private placement market by defining and advising on how to access the alternative financing on offer.

A new guide to European private placements (PP) has been published by a working group organised by a large number of trade bodies and investors. The group behind the guide, the Pan-European PP Working Group (PEPP WG), will now form a permanent committee to keep the document up to date as the market develops and self-regulates the nascent European PP market, International Capital Markets Association’s Nicholas Pfaff told PDI.

The guide defines the main characteristics of a PEPP-compliant deal and how it differs from other financing options. It also outlines the roles and responsibilities of market players including borrowers, investors and various advisors, as well as the processes involved in issuing a private placement.

The guide also directs readers to the documentation templates developed by the Loan Market Association and the French Euro PP working group. Both organisations were involved in PEPP WG which was co-ordinated by the ICMA.

PEPP WG and several other bodies have been working to develop a European private placement market that is distinct from the large and well-established US PP market, through which a large number of European companies finance themselves. 

The European market, though small now, could develop to support sub-investment grade borrowers across the continent, says Pfaff. Around €15 billion of private placements were arranged in France and Germany via schuldschein in 2013.

Some supporters of the US PP market have argued that the European initiative is unnecessary, as PDI discussed in the February issue, but Pfaff points out that it will in the main be in addition to the existing US market. 

The next steps for PEPP WG include a series of roadshow events to promote the guide in London, Paris, Milan and Frankfurt, and possibly other European financial centres, said Pfaff. 

The working group will be turned into a permanent committee and will collect feedback on the guide and update it as a living document at least once a year, he said.

The group was driven initially by the buy-side, he added. Along with ICMA, LMA and Euro PP WG, members include representatives from the Association for Financial Markets in Europe, the European Private Placement Association, TheCityUK and The Investment Association.

Their work was supported by a range of investors and official government representatives from core European countries. To expand the representation to include potential issuers, the new committee will also include representatives from various European treasurers’ associations, Pfaff said.

The committee’s other tasks over the next few years will be to push the development of PP beyond the UK and France, where it is best established. The committee is also discussing how best to monitor and quantify the market as it develops.

The PEPP WG included representatives from Delta Lloyd, Fédéris Gestion d’Actifs, KBC Group, LGIM, M&G Investments, Muzinich and Natixis Asset Management and was supported by law firms Allen & Overy, Ashurst, Bonelli Erede Pappalardo, CMS Bureau Francis Lefebvre, DLA Piper, Gide Loyrette Nouel, Herbert Smith Freehills, King & Wood Mallesons, Kramer Levin Naftalis & Frankel, Linklaters, Loyens & Loeff, Simmons & Simmons, Slaughter and May and White & Case.

Government observers included officials from the Banque de France, the Bank of Italy, the French Trésor and HM Treasury.