French government says pension funds and insurers commit to €1bn SME loan project

French sovereign wealth fund confirms €100m input.

The French government says its has secured the participation of two of the country’s largest pension funds for a novel commercial €1bn lending programme to small- and medium-sized business (SMEs) in France; an investment strategy that is being floated for pension funds in a number of European countries to boost commercial lending. Pierre Moscovici, France’s Economy and Finance Minister, launched the new loan funds called Novo. In a statement welcoming the launch of the fund, Jean-Pierre Jouyet, Director General of France’s €287bn Caisse des Dépôts sovereign wealth fund, announced that the Caisse envisaged investing €100m in the fund, and said both FRR, the €36.6bn Fonds de Réserve pour les Retraites, and ERAFP, the €14bn 100% SRI pension fund for French civil servants, local authorities and the public hospitalssector, would be allocating capital to the funds. Both the FRR and ERAFP declined to say how much they might commit to Novo and said that discussions were taking place but were at an early stage. Jouyet said the Caisse had also partnered with 17 large insurance companies to invest in the Novo funds.
Moscovici said the participation of French insurers and pension funds in Novo would be made on favourable terms under a new assurance code.
The French government said the almost €1bn in commitments to the Novo funds would be invested in loans of €10-€50m to between 30 and 40 SMEs and slightly larger companies for durations of 5-7 years at interest rates of between 4-6 % depending on market conditions.