French institutional investors, including the country’s mandatory pension fund for civil servants and the national pension reserve fund, have stumped up an additional €405m for the Novo funds.
The new money was allocated as part of a second capital raising, which surpassed the initial target of €305m and takes the total size of the Novo funds to more than €1.4bn.
“Practically all” of the 24 initial investors in the Novo funds participated in the increase, according to a statement from Caisse des Dépôts et Consignations (CDC), the state-backed financial institution, and the French insurance association.
IPE understands that four of the initial investors did not participate in the fresh capital increase, although this was for reasons independent of the Novo funds themselves.
The four are ACM, AG2R La Mondiale, Crédit Agricole Assurances and Humanis Prévoyance.
A spokesperson for ERAFP, the €23.5bn mandatory additional pension scheme for civil servants, confirmed that it participated in the capital raising, noting that this was done under the pension fund’s multi-asset mandate managed by Amundi.
The Novo funds were set up in 2013 at the initiative of CDC as part of the French government’s launch of “fonds de prêts à l’économie” (FPE) to kick-start a market for lending to small and medium-sized enterprises (SMEs).
They were initially open to, and backed by, insurance companies but have since been made accessible to a wider range of institutional investors, including pension providers.
There are two Novo funds, Novo 1 and Novo 2, which invest in SMEs and what in France are known as ETI, for “intermediate-sized enterprises”.
Although the Novo funds can also invest in public bonds in practice, the type of companies they target prefer to borrow by way of issuing what are known as private placements – bonds that have some similarity with loans given that their terms are typically heavily tailored to the needs of the company and the usually small group of investors.
Thierry Giami, adviser to CDC’s executive committee and a key figure behind the Novo funds, said Caisse des Dépôts was pleased with the funds’ performance and the impact they have had on the wider market for SME lending in France.
“The Novo funds launched a market for private bonds that small companies didn’t have access to in France before 2013,” he told IPE.
Several other private placement bond funds (FPEs) were created in the wake of the Novo funds’ launch, and Caisse des Dépôts and the investors are “happy to have been copied”, he added.
FRR is looking to invest further in SMEs, having recently tendered a mandate to manage some €600m of investments in French private debt.
Novo 1 is the larger of the two funds, now with €928m in assets, and is managed by BNP Paribas Investment Partners.
Novo 2, with €492m, is managed by Tikehau Investment Management.
The new capital raised is being split across the two funds in the same proportions as for the first closing, IPE understands, with two-thirds (€268m) being allocated to Novo 1 and the balance to Novo 2.