SERVING THE FUTURE
Bpifrance: French Public Guarantee Scheme
A comprehensive support institution for SME
development
JLGC conference
24th november 2014
PLAN
01.
BPIFRANCE presentation:
Main features
02.
The guarantees as a central
piece of the support scheme
03.
From public policies to
adapted guarantee
instruments
O4.
Guarantee allocation:
Beyond product definition,
attitude and partnership
2
Titre de la présentation
23/03/2016
01
.
Bpifrance main features
What is bpifrance?
Structure
Values
Organization
3
Titre de la présentation
23/03/2016
01.
What is Bpifrance ?
A new institution, and a bank for tomorrow’s growth, using
accumulated experience
 Group established in 2013 …
 Presidential objective
 Symbolic sign to entrepreneurship , with a heayweight institution dedicated to this task (assets € 42
billion)
 Target core : fast growing and innovative companies
 Supports the whole of the SMEs population
 … from the addition of pre-existing entities , with proven efficiency over decades
 Guarantee scheme and lending activity
 Innovation support
 Equity investment activity from another French public institution, the « Caisse des Dépots et
Consignations »
 A mission : serve the future
 Not merely and addition, but a source of dynamics
 Institution up to the challenges of « post global crisis » recovery
 Impulse optimism in economic actors, and give incentive to private banks to support them
4
23/03/2016
Equity structure
All the French
public financing
tools
come together
Created by law, Bpifrance is owned by the
Caisse des Dépôts and the French State.
Bpifrance is organised around two separate
primary business activities : Bpifrance
Financement and Bpifrance
Investissement.
5
23/03/2016
Our values :
.
PROXIMITY
90% of all decisions are taken regionally,
where entrepreneurs are located.
DRIVE
Personalised support to entrepreneurs,
providing them with the means to succeed.
SIMPLICITY
The implementation of a financing continuum,
simpler and more accessible than before.
OPTIMISM
Motivated and enthusiastic teams,
striving to make entrepreneurship
a positive experience.
6
A new comprehensive, multi -instrument support institution
Our policy: to invest, finance, guarantee and follow up enterprises, from very
small to large, from home market to export
INNOVATION SUPPORT
DIRECT FINANCING
Direct support (grants and soft loans) to
enterprises’ innovation programs
For all material and immaterial investments,
working capital needs, together with banks and
leasing companies
GUARANTEE
On bank loans, Bpifrance loans and equity investments
Equity investments
As minority shareholder,
in SMEs and large companies,
through specialized funds, or with partner funds
EXPORT STIMULATION
Follow up and provision of services for
international development (in relation with
UBIFRANCE, (support network), and foreign
risk insurance (Coface)
7
Titre de la présentation
23/03/2016
.
Overview of 2013 activity
€ 10 BN
Allocated financing
€ 4 BN in short term loans
€ 3.7 BN in investment loans
€ 1.3 BN in development loans
€ 750 M in innovation financing
€ 8 BN
Of which:
€ 1 BN
€ 111 M
guaranteed bank loans
Capital investment
€ 2.5 BN in business start-up loans
(guarantee funds)
€ 800 M in cash flow consolidation
invested directly in innovation
capital
M invested directly into SMEs
€ 121
€ 368 M invested directly in mid-caps
€ 444
and large caps
M invested in partner funds
8
23/03/2016
Organization: a strong regional anchoring
A strong partnership with
regional authorities
Bpifrance works in collaboration with
regional authorites,
to develop financial solutions adapted to
territorial specificities.
CREATIVE ENERGIES
ARE IN REGIONS.
90 % OF DECISIONS ARE
TAKEN LOCALLY.
 Regional authorities are present in Bpifrance’s
governing bodies: Board of Directors, National
Orientation Committee (NOC) and Regional
Orientation Committees (ROC).
 Regional authorities provide many financial tools
for businesses (guarantee, financing, innovation
regional investment funds…).
 All French Regions operate a co-guarantee
scheme with Bpifrance, through a complete
processing and risk management set up.
.
9
23/03/2016
Network structure
Bpifrance, closer to entrepreneurs
42
regional
offices
90%
1
of all decisions are
taken regionally
Specialised contact reaching
out to businesses
10
23/03/2016
02
.
Guarantees :
A central piece of the
business model
Public guarantees scheme:
State’s objectives for a return on its
financial involvment
Outreach
Synergies with other financial
instruments
11
Titre de la présentation
23/03/2016
Guarantees : a central element of the system
Guarantees serves as factor of economic stimulation, and
serve ambition to make a positive return for the state
 As a public scheme, the guarantee serves a purpose of economic development
 Role of mobilizing energies and financial means
Stimulation to entrepreneurship: encouragement to initiatives, « new blood », new ideas
Facilitation for bankers : higher coverage for riskier projects (start ups, innovation, export…)
 Accepting a reasonable rate of default in guarantee portfolios allows to support more projects
 SME risk can be reduced, but not totally avoided
Do not cast away the possible future Google or Apple!
SME and innovation risks analysis do not abide to scientific rules and integrates elements of hazard
 Our objective : give a chance to all projects, with serious and motivated actors
 Funding the guarantee system is profitable for the State point of view, as detailed in the next slide
12
23/03/2016
Guarantees allocation create a stimulating business model
on State support
State /
Regions /
E.U.
+ Tax Returns
Profit
- Social Benefits
Employment
+ GDP Increase
Added Value
Multiplier
Guarantee share
Bpifrance
risk
Guarantee
Fund
From 3 to 22,
according to risk
expectation on
type of project
Titre de la présentation
PROJECTS &
SUPPORTED
INVESTMENTS
23/03/2016
Financing
to SMEs
40% to 80%
according to
project type
13
Guarantees: position as a central element of the system
A successful outreach
 Large range of application and beneficiaries
 Loans (short, medium and long), Mezzanine, and equity
 Covers from 40 % to 80% of the lender’s risk
 Targets both valuable borrowers lacking collateral, and fast growing enterprises
 Successful implementation
 Over 72 000 guaranteed files yearly
 € 8 billion of financing guaranteed in 2013
 Outstanding liabilities of € 12,2 billion
 Risk sharing with over 150 partner banks
 Serves the largest part of Bpifrance customers (90%)
 From Start ups, small companies (EU SME definition, up to 250 employees)…
 Up to larger companies on specific products (guarantee on investments abroad, « mezzanine
loans », performance bonds)
14
23/03/2016
Guarantees mean synergies and leverage effect on other
financing instruments
 The guarantee coverage allows to extend the whole range of Bpifrance financing to more SMEs
 A leverage effect operates on other instruments: net final risk can leverage mor financing
 All stages of enterprises life are supported
 An adapted resource exist for each stage of development and project
 Better sustainability of the institution
 Guarantee improves the business model of other activities, and allows a larger customer base
for lending and equity activities
 Risk reduction increases opportunities, making challenging projects acceptable
 Operating costs at group level are reduced by common due diligences and instruments.
 Guarantee clients improve deal flow for other offer of financing
 The large supported population of guaranteed SMEs offers visibility on clients for other Bpifrance
products
 Use of accumulated data from previous operations creates a rich customer base
15
23/03/2016
Impact of guarantees on product engineering
3.
A specific financing, only provided in France by Bpifrance : the
« development loan », or « contrat de developpement »
 It belongs to the category of Mezzanine loans : a new mix « guarantees / lending »
 They are long term loans (7 years), with a long grace period, based on intangible investments, and
requesting NO guarantee from the borrower.
 Patient capital, specially designed for financing intangible assets and immaterial investments
 Offer is made possible thanks to an internal guarantee scheme covering 80 % of risk
 A seducing form of financing
 They can bridge the gap for enterprises not ready to deal with an investor
 They offer “easy” money for investments
 They do not apprehend the borrowers assets, which can be used for obtaining more classic loans
from banks
 A successful implementation
 Created only 10 years ago, this type of loans represent now 25 % of loans provided by Bpifrance.
 Suits perfectly active, successful and profitable enterprises , representing most of the pertfolio
16
23/03/2016
.
03
Guarantees :
From aspects of public
policy to adapted
instruments
Public guarantees scheme:
Historic positioning
Contra-cyclical actions
New priorities : export and innovation
17
Titre de la présentation
23/03/2016
From state policy objectives to application of guarantees
.
Traditional targets
Specific targeted
applications
for the new driving
actors of economic
growth
-
The core targets for the use of guarantees:
-
Traditional credit constrained companies
-
The first age of the Guarantee support
-
Contra-cyclical guarantees (crisis)
-
Supporting Exporting champions
-
Strenghtening innovative enterprises
18
01.
The « classic » guarantee offer, related to historic missions
 Guarantee on Start ups financing
 For new companies , or less than 3 year old entities
 risk coverage : 60 % on loans, personal loans, leasing and short term facilities
 Guarantee on investment financing
 Companies of more than 3 years of age for renewal or capacity investment
 Risk coverage: 40 % on medium or long term loans and leasing
 Guarantee on financing for SME equity transfer
 Company shares bought by new owner(Change of generations, « new blood »)
 Risk coverage : 50 % on loans, personal loans
 Guarantees on financing working capital needs
 Provide permanent resources in growing enterprises, improving financial structure
 No restructuring for non sustainable enterprises
 Risk coverage: 50% on loans
 Guarantee on financing international development
 Finance investments dedicated to export production
 Finance, through mother company, the financial needs of foreign subsidiary
 Risk coverage: 50 % on loans, counter guarantee on some bank bonds
19
23/03/2016
01. Policy driven guarantee instruments: answering SME needs
through the global crisis (2009-2010)
.
Support to demand
stricken companies
Restructuring financial
profile for a sound
positive exit from the
crisis
-
Risk coverage quota increase
-
Extended eligibility (companies size,
sectors, temporary risk profile)
-
Operational changes adapted to a crisis
situation
-
Guarantee on short term facilities
-
Guarantee on the medium term loans for
working capital needs
Allowing the implementation of a
20
3.
The « anti crisis » special scheme (2009 -2010)
 Risk coverage increase
 Up to 90% (instead of 50%)
 Specfic funding
 Process respecting EU regulationl, with temporary loosened rules
 Eligibility extension:
 Large companies could benefit from this support
 Unitary risk limit increased
 Operational improvements for this scheme
 Specific mediation committeee in Regions
 Concerted action with all public creditors and banks
 Variable fee, based on borrower’s quality (French central bank rating system)
 Guarantee offer applicated to more financing
 For short term facilites confirmation
 For medium term loans on Working Capital Needs
 Recorded success
 Acceptable losses observed on the population
 Survey from beneficiaries attest survival for half of beneficiaries was due to this specific support
23/03/2016
21
Two examples of enforcing policy objectives with adapted use
of guarantees
.
Support to export driven companies
Support to innovative
enterprises
-
Guarantee on incentive financing
Guarantee on foreign subsidiary equity
Guarantee on the implementation of a
financing continuum,
-
Guarantee on pre –equity preparation
phase financing
Guarantee on innovation loans
Guarantee for innovation targeted equity
funds
Guarantee on industrialization phase of
innovation
Guarantee on financing market approach
and I.P..
-
22
Focus on…
expanding your business internationally
ESTABLISHING
INTERNATIONALLY
We finance your development:
We make your prospecting easy:
 Bpifrance Export Loan
 Bpifrance minority share acquisition
 Coface guarantee for bonds
and prefinancing
 UBIFRANCE export development support
 Coface prospecting insurance:
covering the potential financial risk
of your export development
FINANCE YOUR
DEVELOPMENT
MARKET
PROSPECTING
SECURE
YOUR PROJECT
We help your export investment
to succeed:
 UBIFRANCE establishment support
 Establishment back-up through the VIE
(international business volunteer program)
 Coface investment insurance
 Bpifrance international project guarantee
We insure your Export project:
 Coface credit insurance:
a comprehensive insurance
for your contract
 Coface exchange insurance :
neutralises your risk
In each phase of your company’s development, we provide financing, guarantee, insurance, investment
and support solutions that are complementary and adapt to your plans for conquering new markets.
23
Titre de la présentation
23/03/2016
Financing making decisions easier for exporters
How to motivate enterprises to invest in a international development effort ?
 The constraint:
 Initial budget for exploring a foreign country can be high: traveling costs, legal costs, legal advice,
costly executives time…
 Many SMEs are dissuaded by expected initial expenses , from50 000 to 100 000 €
 The answer:
 Immediate delivery of a long term loan, without request for collateral, covering initial expenses
 Avoids weakening the cash position of the SME
 No request of collateral to secure the loan
 If attemps fail to set foot in the target country, reimbursement over 6 or 7 years is easy
 Investments in equity (purchase of local company, or creation of subsidiary) can also be financed
 by the same type of mezzanine loan
 Or via classic bank loan
 A specific project guarantee is offered to SMEs
 Based on invested equity in subsidiary
 Covers economic risks causing default
 Complements COFACE guarantee (on political risk)
24
23/03/2016
Focus on…
Supporting and facilitating innovation projects,
MAKE YOUR
STRATEGY
SUCCESSFUL
We encourage the entry
of investors:
We accompany you in:
We help your innovative business project
to materialise:
 Confirming the feasibility
of your innovative project
 Preparing the package and
the partnership for
your collaborative project
EXPLORE THE
FEASIBILITY
CARRY OUT
YOUR PROJECT
We accelerate industrial
and commercial launches :
 Innovation loan
and facilitate obtaining
bank loans:
 Bank loan guarantee
REINFORCE
YOUR CAPITAL
 Pre-creation support
TRANSFORM
YOUR IDEA
 Seed loans
 Direct share acquisition
 Qualification as an
“Innovative Business”,
giving access to FCPIs
(mutual funds for
innovation)
We finance the development
of your project:
Individually
 Development and innovation aid
 Financing of the Research Tax Credit
In partnership
 Aid for collaborative projects
Internationally
 Development of international
collaborative innovation
The different financial solutions proposed by our teams can be provided in the form of grants, reimbursable advances,
interest-free loans, profit-sharing loans, share acquisition and guarantees on bank intervention, depending on the risk
and the state of advancement of your project
25
Titre de la présentation
23/03/2016
Motivate enterprises to step ahead in their innovation projects
 The challenge:
 Facilitate the decision for firms to engage the (costly) initial steps
 Financing patent purchase, R&D budget, access to visibility on the innovation feasability
 Negotiating costs and intellectual property protection
 Setting adequate diligences for a collaborative project with another company
 The answer:
 Immediate delivery of a long term loan, without request for collateral, covering initial expenses
 No immediate consequence on the cash position of the SME
 No allocation of the company’s assets to secure the loan
 If attemps fail to set foot in the target country, reimbursement over 6 or 7 years is easy
 Financing the early seed phase: developping prontotypes
 Equity partners cannot be convinced before sufficient convincing development is reached
 This period (crossing the death valley) can be deadly if funds are short
 The answer:
 Innovation costs can be supported by a similar mezzanine loan, if business plan is credible
26
23/03/2016
.
04
Guarantees allocation:
Beyond product definition,
Attitude and partnership
Public guarantee scheme:
Establishing active
cooperation with banks
Building motivations
27
Titre de la présentation
23/03/2016
4. Improving private financing involvement in the country’s modernization
Developping partnerships with private financial intermediairies, and motivation
for entrepreneurs.
 A regular relation is established with financial intermediaries
 Creates trust, strong personal relation and illustrates common interest
 Constant dialogue with the 1000 skilled technicians in our network
 Additional visibility on risks, from accumulated experience, offered to the partner
 A Successful multiplier effect on public money
 For each € of risk or lending from Bpifrance, private partners are providing another €
 Simplicity of message
 « Partnership and risk sharing offered for all cases, even for riskier projects »
 One stop shop for all the banker’s clients
 Streamlined processes
 A reliable and continuous support encourages initiatives of entrepreneurs
 Bpifrance rules sets limits to the pressure of banks on personal guarantees
 Constant networking with all actors of SME support environment, creating opportunities
 Culture of success in our communication (club « excellence ») stimulates other SMEs
28
23/03/2016
Image and concept , as a reference for efficiency
Cumulated experiences and skills have to create value and credibility for a
guarantee scheme
 Cumulated different skills (on financing, on technology, on international practices ) help finding the best
form of support for a project and in the most rational way.
 Entrepreneurs are accompanied , during their growth, by interlocutors of the same group sharing the
same attitude in favour of entreprenarial support.
 Such factors add credibility on the risk mitigation effect brought by presence of Bpifrance in projects
 Risk sharing and risk mitigation (reducing the probability of risk occurrence) are now essential to
convince bankers
 The construction of the institution’s image helps mobilize the indispensable presence of commercial
banks to serve SMEs needs.
29
23/03/2016
Image and concept , as a reference for efficiency
The « all inclusive development institution »: a meaningfull
benchmark for international counterparts.
 Active Peer to peer dialogue and relationship with similar institutions
 Participation in EU associations and programs (EUREKA, EUROSTARS)
 Specific Work Groups (AECM, Montreal Group with 6 major Development institutions of Canada,
Bresil, Russia, Mexico, China, India)
 Bilateral cooperation
 Active policy of concluding agreements : exchange of good practices, organization of support to
collaborative projects
 Increasing number of multi-object cooperation through various financial instruments
Provision of Technical Assistance, to set up or adapt schemes and processes.
 So far, 18 direct assignments on guarantee entities, or innovation support agencies in Africa, and
Central Europe and thematic studies through European programs .
30
23/03/2016
Thank you
for your attention
Jean- Louis Leloir
International expertise
Direction of International affairs and Development
Bpifrance
jl.leloir@bpifrance.fr
tel + 33 1 41798396
cellular: + 33 680485659