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Insurers are getting involved with the ‘Relance’¹ Equity Loans for the recovery of SMEs and employment

26/04/2021

In order to support SMEs in the face of the consequences of the health crisis, insurers are getting involved to stimulate the recovery by investing massively in the unprecedented scheme promoted by the French Ministry of the Economy, Finance and Recovery.

This scheme was set up in a few weeks by the French Treasury, the French Insurance Federation and the main French banking groups.

Implemented to support the recovery, this initiative will fuel the investment capacity of SMEs-ETIs by strengthening their balance sheet over the long term. This initiative will contribute to the growth of employment in our country.

18 insurers have joined forces for this first round of fund raising, in favour of SMEs and ETIs, which will be carried out through an ad hoc investment fund called ‘Relance’ Equity Loan Fund managed by several French asset managers selected by the French Insurance Federation. This first round of financing amounts to €11 billion, an unprecedented volume in France and in Europe, which will make it possible to finance up to 90% of the equity loans distributed by banks to dynamic companies. A second round is already planned for June 2021.

Since the beginning of the health crisis, the insurance sector has demonstrated that it is fully commited to the economic recovery of our country. In the summer of 2020, the insurers and Caisse des Dépôts structured and implemented ‘Relance Durable France’2, a €2.3 billion investment programme for the sectors most affected by the crisis, including in healthcare and tourism. In addition, the insurance sector largely promoted the ‘Relance’-labelled funds launched in October by Bercy3. By the end of 2020, insurers had already invested EUR 3.8 billion.

Today, the insurance industry continues to get involved alongside the State and in cooperation with the banking sector to initiate the operational phase of the ‘Relance’ Equity Loans.

Announced by Bruno Le Maire on 4 March 2021, the implementation of the ‘Relance’ Equity Loans aims to help SMEs to bounce back and seize growth opportunities during the economic recovery. These loans strengthen the equity of companies to promote their growth. Distributed by the banking networks, these Equity Loans will be financed up to 90% thanks to the ‘Relance’ Equity Loan Fund which benefits from a 30% State guarantee. For this purpose, the French Insurance Federation has selected 10 managers. 

Aware of the social stakes that the challenge of recovery represents for our country, 19 long-term investors have committed to elaborate and launch the ‘Relance’ Equity Loan Fund. At the end of this Fund’s first closing, EUR 11 billion have been raised by 18 insurers: Assurances du Crédit Mutuel, AG2R LA MONDIALE, Allianz, Aviva, AXA, BNP Paribas Cardif, CNP Assurances, Covéa, Crédit Agricole Assurances, Generali, HSBC Assurances, Natixis Assurances, Neuflize Vie, PREPAR-VIE, SMA, Société Générale Assurances, Suravenir, Swiss Life. The Caisse des Dépôts et Consignations has also joined the scheme.

The diversity of the players which have decided to join the ‘Relance’ Equity Loan Fund is proof of an unprecedented level of commitment. The amount of capital raised during this first round confirms the driving force of long-term investors such as insurers in the recovery of our country. Given the interest shown by several potential investors, a second closing is expected in June 2021. The French Insurance Federation is also in a position to implement the ‘Obligations Relance4’ scheme provided for by France Relance and thus strengthen support for companies’ investment capacity.

Bruno Le Maire, the French Minister of the Economy, Finance and Recovery, stated: “I would like to thank the insurers and the Caisse des Dépôts et Consignations for the investment of EUR 11 billion in the ‘Relance’ Equity Loans. This commitment demonstrates the confidence of investors in this strong measure implemented by France Relance, which will support investment by French companies and stimulate the recovery of our economy. The forthcoming second round of financing, as well as the launch of the Obligations Relance bonds in the coming weeks, will complete the means available to companies to strengthen their balance sheet and invest.”

Florence Lustman, President of the French Insurance Federation, stated: “Because they meet the long-term protection needs of their policyholders, insurers are heavily investing in the productive economy. Today, with the ‘Relance’ Equity Loan Fund, the insurance sector is at the forefront of the collective effort to revive the economy. Our civic duty as insurers is to support our customers sustainably and invest over the long term, thus preparing the future of our children. I am particularly proud of the quick and strong involvement of insurers both to put together the ‘Relance’ Equity Loan Fund in record time and to provide it with an exceptional investment capacity in favour of SMEs and therefore employment.”

 

[1] Recovery

[2] Sustainable Recovery France

[3] French Ministry of the Economy and Finance

[4] Recovery Bonds

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