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FRR-backed SME fund supports €60m private placement

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Novo 2, an SME direct lending fund in which the French pensions reserve fund FRR is the biggest investor, has contributed €10m to a €60m seven-year bond for Direct Energie, France’s third-largest electricity and gas provider.

The bond was issued as a private placement (Euro PP) and is not listed.

The €60m raised will help increase Direct Energie’s financial flexibility and thereby speed up its business development plan, according to a statement.

More specifically, it will enable the company to implement “the vertical integration strategy” in connection with its December acquisition of a combined-cycle gas turbine plant from the Swiss group Aldiq.

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The plant is located in Bayet, central France.

Novo 2 is part of a €1bn private placement fund platform launched in October 2013 by Caisse des Dépôts et Consignations (CDC) and 27 insurance companies to provide loans to small and medium-sized enterprises (SMEs).

The Novo programme was split in two funds – Novo 2 is managed by Tikehau IM, and Novo 1 by BNP Paribas Asset Management.

Since its launch, Novo 2 has invested more than €284m in privately placed debt from 15 companies, with an average maturity of 6.5 years.

This represents more than 80% of the total amount entrusted to the asset manager.

The €37.2bn Fonds de Réserve pour les Retraites (FRR) is the largest investor in the Novo funds, according to a spokesperson at the state fund, having participated to the tune of €120m when they were launched.

FRR’s involvement in the Novo programme is in keeping with the fund’s search for yield and desire to contribute to the financing of the French economy.

The Novo platform has similar aims but is distinct from the Novi institutional investment vehicle launched by the CDC in April last year.

While the Novo funds only invest in SMEs’ private debt, the €535m Novi platform can also invest in private and listed equity.  

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