Sustainable Stimulus Investment Programme
As major players involved in financing the economy and as long-term investors, French insurers have made a commitment to the public authorities to support the country’s economy affected by the health crisis and have decided to set up with Caisse des Dépôts et Consignations, an investment programme “Assureurs – Caisse des Dépôts Relance Durable France”, predominantly invested in equities.
This investment programme, the initial amount of which was EUR 1.5 billion, is finally going to reach EUR 2.2 billion, with nearly EUR 2 billion coming from insurers.
This programme, which comprises three tranches, benefits mainly ETIs* and SMEs, the tourism sector and the healthcare sector.
* Intermediate sized-enterprises, INSEE definition
Update: 1st February 2021
As major players in responsible investment, committed to the fight against global warming, French insurers wish to promote a sustainable economic recovery by innovating in terms of taking into account extra-financial criteria in this new investment programme.
Thus, any unlisted investments carried out is conditional on the integration of sustainable development considerations into the company and on setting objectives in this area.
In addition, extra-financial criteria are systematically taken into account in the company selection process and certain undertakings that use or produce thermal coal, tobacco, or that transport or market chemical or biological weapons, or activities in proven violation of the principles of the United Nations Global Compact are excluded.
Some of the programme’s equity funds could benefit from the ‘recovery’ label presented by Bruno Le Maire, French Minister of the Economy, Finance and Recovery, and Alain Griset, French Deputy Minister in charge of Small and Medium-Sized Entreprises.
The financial and extra-financial impact of the programme will be assessed throughout its implementation in order to report, among other things, on job creations, the proportion of women in management positions, the carbon footprint, and relocated production.
The production by management companies of this reporting is an eligibility condition to the Programme.
- The reopening of the NOV funds made it possible to allocate €309 million before July to the NOVA 2 and NOVI 2020 listed equity funds and the NOVO 2020 debt fund, managed respectively by Amiral Gestion, La Financière de l’Echiquier and Tikehau. They allow the financing of any kind (debt, equity) of growing SME-ETIs* in the industrial and service sectors.
- In addition, investors wanted to set up a €124 million funddesigned to support companies in the regions of France with expansion capital and buyout capital, while aiming to improve environmental, social and governance factors. This Nov Relance Impact fund managed by Turenne Groupe will in particular support companies with employee shareholding and schemes for sharing capital gains with all employees.
- This support for companies of all sectors is being supplemented by the creation of ten funds proposed and sponsored by seven insurers for a total amount of circa €900 million. These sponsored funds are part of a common and consistent strategy: allocating medium and long-term financing to French companies, mainly VSEs, SMEs and ETIs, while supporting the French financing ecosystem. They cover debt, listed shares and unlisted shares. Sponsored funds must demonstrate the alignment of their strategy with the overall objectives of the programme and their compliance with the technical criteria defined in a charter.
*“Très Petite Entreprise” or “TPE”, INSEE definition
The second tranche, more than €200 million, is intended to finance businesses in the tourism sector through:
- a €38M fund managed by October, a crowdfunding platform, which will finance the companies in the sector through loans with deferred repayments for amounts from €30K to €1.5M;
the Nov Tourisme - unlisted shares Sustainable Stimulus France fund of €170 million, managed by Montefiore Investment, brings together 16 leading French institutional investors, including the main French insurers, Caisse des Dépôts and Fonds de Réserve des Retraites. The objective of this fund is to strengthen the equity of French SMEs and ETIs in the tourism, catering and leisure sectors, which have been heavily impacted by the pandemic. In addition to providing essential financial support, it has the ambition to contribute to the emergence of a generation of innovative and resilient companies in this sector, with a knock-on effect on the entire sector. With a 10-year maturity, the fund will invest EUR 5 to 10 million per company in equity and quasi-equity, generally as a minority shareholder.
The management companies selected in this Tourism strand have all accepted the programme’s ambitious ESG agenda and will therefore support companies in their efforts to make progress on sustainable development issues, in particular the use of natural resources and employment. For example, Montefiore Investment has committed to devoting part of its remuneration to professional training grants for tourism-related professions.
The last tranche, totalling €780 million financed by 19 insurers and 3 institutional investors, aims to strengthen health sovereignty in France by investing in healthcare research, infrastructure, logistics and services.
Three funds dedicated to the healthcare sector have been set up: the Healthcare Unlisted Equity Fund, the Healthcare Unlisted Debt Fund and the Healthcare Listed Equity Fund. They will provide funding primarily to:
- the relocation of research laboratories or drug production units,
- the development of services useful to healthcare: personal services, home care, telemedicine,
- the research, innovation and development of medicine, technology and healthcare devices,
- the prevention of diseases.
As such, the companies selected by the funds will have to increase their production capacity in France. The financial and extra-financial impact of this component will be assessed throughout its implementation to reflect the positive contribution of these investments.
This financing strategy will take into account the challenges of the healthcare sector, their change over time and the dynamics of discovery.
The governance of this component is based on an Investors Committee and a Scientific Advisory Board chaired by Elisabeth Hubert, former French Minister of Public Health and Healthcare Insurance, which is composed of 12 leading experts from the world of health. The role of the Scientific Advisory Board has been to advise investors in their selection of management companies to assess their investment and management proposals.
The three selected asset managers are Eurazeo, Eiffel Investment Group and Tocqueville Finance:
NOV Healthcare Unlisted Shares
The €420 million, 10-year fund will provide equity capital to some fifteen French SMEs and ETIs to support their development. Part of the fund may finance LBO transactions or late-stage innovation.
The investment company Eurazeo has been selected to manage this fund.
NOV Healthcare Unlisted Debt
The €270 million fund will bring senior debt to 15 to 20 French SMEs and ETIs. The term of the loans is between 3 and 7 years.
An initial investment has already been made in Fareva, a leading manufacturer of active ingredients. This company is a French leader in pharmaceutical contract manufacturing, the role of which is key in rebuilding French pharmaceutical autonomy in the coming years.
The asset manager Eiffel Investment Group has been selected to manage this fund.
NOV Healthcare Listed Shares
The €90 million fund will be mainly invested in French ETIs, with possible diversification into European companies.
The asset management company Tocqueville Finance has been selected to manage this fund.