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Workshop: Finance for SME acquisitions in Europe made easy & good practices to finance cross-border acquisitions Moderator: Lex van Teeffelen
Usual Structure
Main office (and possible guarantees) are located in one country
All new assets (and new collateral) are located in another country
Target
(Equity)
Capital
Buyer
(Subordinate)
Loan
Seller
Bank Loan
Or
Third Party
Capital
Agenda
9.30 – 9.40 Introduction 9.40 – 9.50 Mrs Chiara Amadori (EIF) 9.50 – 10.00 Mr Gilles Lecoguen (BPI France) 10.00 - 10.10 Mrs Viviane Mol (Sowalfin) 10.10 - 10.20 Laurent Wenric (Sofinex) 10.20 - 10.30 First questions to panelists 10.30 - 11.00 Questions audience
Chiara Amadori, Senior Transaction and Relationship Officer, European Investment Fund
• Part of the EIB Group
• Offers a wide range of targeted Risk Financing or Risk Sharing products, ranging from venture
capital to guarantees and microfinance, to stimulate entrepreneurship and innovation of SMEs
and mid-caps in Europe
• Works with and through financial intermediaries across the EU-28 and EFTA countries,
candidate and potential candidate countries
• The prime provider of SME financing in Europe
The EIF in a nutshell
Overall commitments*
EUR 9.3bn (2017)
EUR 9.45bn (2016)
EUR 7 bn (2015)
EUR 3.3bn (2014)
Leveraged volumes
EUR 35.4bn (2017)
EUR 42.7bn (2016)
EUR 26.9bn (2015)
EUR 13.9bn (2014)
SMEs supported
over 1.8 million since
1994
202,000 in 2017
1,560,000 jobs sustained
in 2017
Partners
600 private equity funds
400 banks, guarantee
and promotional
institutions
*in equity, guarantees, securitisation and inclusive finance
EU guarantee programmes helping businesses at every stage
SME Development Stages
PRE-SEED PHASE SEED PHASE START-UP PHASE EMERGING GROWTH DEVELOPMENT
ERASMUS+ Student loans
Cultural and Creative Sector Guarantee Facility
COSME Loan Guarantee Facility
InnovFin SME Guarantee
EIB InnovFin products
SME Initiative
EaSI (Employment & Social Entrepreneurship)
HIGHER RISK LOWER RISK
Capped guarantees (free of charge)
EFSI
EFSI
EFSI
EFSI
Focus on Business Transfer support to date: COSME and InnovFin
*Data as at Dec. 2017
In total, EUR 715m of loans for business transfer purposes benefiting 7,067 SMEs and
Small mid-caps were already supported as of end of 2017
• 88 agreements signed across 27 countries
supporting EUR 28.4bn of SME financing
for an aggregate budget allocation of EUR
992m
• *EUR 12.8bn of loans already guaranteed
supporting 335,753 SMEs
• *Out of this, EUR 680m of loans across 10
EU countries were granted to support
business transfer operations of 7,027
SMEs
• 172 agreements signed across 41
countries supporting EUR 18.7bn of SME
and Small Mid-Caps financing
• *EUR 6.1bn of loans already guaranteed
supporting 13,730 SMEs and Small Mid-
Caps
• *Out of this, EUR 35m of loans across 10
EU countries were granted to support
business transfer operations of 40 SMEs
and Small Mid-Caps
InnovFin SMEG COSME LGF
Case Studies - COSME - DE
*Data as at Dec. 2017
• Watchmaker shop that used to belong to
Joachim Reimer, a watchmaker himself, who
took Michael Georg Jost under his wing and
ultimately proposed to Georg to take over the
business and its existing clientele
• Thanks to the joint backing of EIF and the
Investment Plan for Europe, the EU initiative
aiming at generating new investments in
Europe through the support of small and
medium-sized enterprises, Georg was able to
buy the equipment he needed in order to
remain competitive in the watchmaker market
• http://www.eif.org/what_we_do/guarantees/case
-
studies/efsi_cosme_klassische_uhren_jost_ger
many
Klassische Uhren Jost
• Optical centre located in Neuwied, a small town
located in the north of the German state of
Rhineland-Palatinate
• For the past 40 years, the Strobl family, first the
parents and now their son Sebastian, have
been offering professional and attentive service
to customers in need of new glasses
• Thanks to the joint backing of EIF and the
Investment Plan for Europe, the EU initiative
aiming at generating new investments in
Europe through the support of small and
medium-sized enterprises, Sebastian was able
to buy and take over his parents’ business
• http://www.eif.org/what_we_do/guarantees/case
-studies/efsi_cosme_optik_fuhr_germany
Optik Fuhr
Visibility and promotion – SMEs supported by EIF
*Data as at Dec. 2017
https://www.eif4smes.com/
Contacts
COSME and CCS
Gunnar Mai
tel +352 2485 81358
e-mail [email protected]
M. Chiara Amadori
tel +352 2485 81629
e-mail [email protected]
EUROPEAN INVESTMENT FUND
EaSI
EUROPEAN INVESTMENT FUND
Per-Erik Eriksson
tel +352 2485 81316
e-mail [email protected]
Riccardo Aguglia
tel +352 2485 81481
e-mail [email protected]
InnovFin
EUROPEAN INVESTMENT FUND
Vincent Van Steensel
tel +352 2485 81351
e-mail [email protected]
Roland Kampe
tel +352 2485 81271
e-mail [email protected]
Regional Mandates and Securitisation
Bernardo Ghilardi
tel +352 2485 81536
e-mail [email protected]
Daniela Francovicchio
tel +352 2485 81276
e-mail [email protected]
EUROPEAN INVESTMENT FUND
Gilles Le Cocguen, Head of Euroquity, BPI France
Bpifrance toolbox for
SME international acquisition
SUMMARY
1. Bpifrance in a nutshell
2. Bpifrance crossborder M&A supports
3. Bpifrance 200M€ International Build-up Fund
1. Bpifrance in a nutshell
France public investment bank The trusted partner for entrepreneurs Bpifrance finances businesses from the seed phase to transfer to stock exchange listing, through loans, guarantees and equity. Bpifrance accompanies firms developing export activities and provides support for their innovation projects through consulting missions, trainings, networking and acceleration programs
Bpifrance international activities are evolving:
We insure businesses export activity
through Bpifrance Assurance Export
We have 9 permanent international representants:
Brussel, New York, Warsaw, Abidjan, Johannesburg,
Mexico, Dubaï, Shanghai & Singapore
€ 2,4 BN CAPITAL
INVESTMENT
€ 13,6 BN FINANCING
€ 8,4 BN BANK LOANS
GUARANTEED
€ 24,4
BN ALLOCATED TO BUSINESSES**
80 000 BUSINESSES RECEIVED SUPPORT
1. Bpifrance in a nutshell
Our mission: SERVING THE FUTURE
Accompany businesses in their growth
1. Prepare tomorrow’s competitiveness
2. Develop an ecosystem that favours entrepreneurship
3.
2 500 EMPLOYEES READY TO SERVE ENTREPRENEURS
3 GOALS
Our values:
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
90% of all decisions are taken regionally,
where entrepreneurs are located
Personalised support to entrepreneurs,
providing them with the means to succeed
PROXIMITY
DRIVE
2. Bpifrance crossborder M&A supports : EuroQuity Network
Company
Company
looking for companies
to invest in
Investors
looking for bankable
projects to invest in
looking for investors
96M€ commited
by Bpifrance
to support
400 SMEs
Up to 1.5M€
2. Bpifrance crossborder M&A supports : International Guarantee
French
SME
SPV
acquisition
up to 60%
guarantee
loan or risk participation
Foreign
company
French
bank
Foreign
bank
creation
signed
commitment guarantee
2. Bpifrance crossborder M&A supports : International Project Guarantee
French
SME or Mid-cap
Foreign
company
controlling
investment
up to 50% guarantee
for economic risk
up to 95% guarantee
for political risk
24M€ commited
by Bpifrance
to support
100 SMEs
Up to 1.5M€
(additionally)
3. Bpifrance 200M€ International Build-up Fund : Investment thesis
Partnership with dynamic French
SMEs with great potential for
international growth
Investing beside French SMEs in
foreign companies with strong
position onto their core market
Custom-made assistance during
acquisition/Joint-Venture
Target identification
Financial structuring
Co-financing
Introduction to local
stakeholders
Global reach Companies with a turnover ranging from
€20m to €1.5bn, industry agnostic,
management as reference shareholder
Companies with an EV ranging from €10m to
€100m, industry agnostic, synergies with the
French group
Helping French SMEs become worldwide leaders
by implementing an international build-up strategy
3. Bpifrance 200M€ International Build-up Fund : Investment principles
Systematically co-investing
beside a French company
Targets Foreign SMEs
(€10m < EV < €100m)
Equity
Mezzanine
Buyout
Growth capital
Minority stake
Global
reach
Holding period
5-8 years
Co-lead
investor
Ticket size
€3-30 (€, $, local currency)
Industry agnostic (apart from banks, real estate
and infrastucture)
-
3. Bpifrance 200M€ International Build-up Fund : SMEs needs
• Identification of new markets
• Selection of the best way to enter new markets (build-up, joint-venture,
distribution agreement)
• Secure local operations, both financially and industrially
• Understand cultural differences
French
SME
International
Build-up Fund
Foreign
target
company
60% 40%
3. Bpifrance 200M€ International Build-up Fund : Our answers
• Tailor-made assistance for the identification, analysis and structuring of international build-up
• Identification of markets and target companies
• Due diligences
• Structuration of the transaction in compliance with local laws
• Reach for local investors, if necessary
• Co-financing in €, $ or local currency
• Support from our international networks for key stakeholders identification (managers, business
partners, local customers & suppliers)
• Direct exposure to Bpifrance Financement Export (guarantee, export credit, exchange risk insurance…)
and to other private equity teams of Bpifrance for a broader partnership
French
SME International
Build-up Fund SPV
60% 40% Local
investors
Foreign
target company
40% 60%
Bpifrance Financement Export
3. Bpifrance 200M€ International Build-up Fund : Organisation & team
• €300m invested in ~30 private equity deals in France and abroad (15 countries)
• Broad range of private equity skills including LBOs, growth Equity, lead / co-investment, emerging markets
• International network: M&A firms, Development finance institutions (DFIs), banks, consulting firms, investment
funds…
• Additional skills: strategy consulting, audit/transaction services, entrepreneurship, business development
• Two additional experienced investors are being recruited
A close-knit team
with demonstrated
track records in
France and
abroad…
Pierre Rousseau – Investment Director •Bpifrance Investissement since 2017 •Edmond de Rothschild, Proparco (AFD), CIC LBO Partners ESCP Europe
Guillaume Mortelier– Member of the Executive Committee •Bpifrance Investissement since 2012 •Proparco (AFD), Astorg, Bain & Company X, Ponts
…supported by
international
partners
Partnership with Business France
Partnership with Proparco (AFD)
Bpifrance Initiative Conseil
Viviane Mol, Head of Financing (loans & guarantees), Groupe SOWALFIN
SUMMARY
1. SOWALFIN, who we are
2. Business transfer statistics
3. Partnership with EIF
4. An example
SOWALFIN : limited company
created in 2002
main shareholder : the Walloon Region
geographical area of operation : the Walloon Region
The company aims to promote the creation, development and transfer of
SME’s in Wallonia by providing specific and tailored financial products acting
as a one-stop-shop dedicated to the public financing of SME’s.
Main products :
• Partial and additional guarantee on bank loans (up to 75%, maximum
nominal amount of EUR 1,5 million)
• Cofinancing with commercial banks through subordinated loans (up to
40% of the financing needs, maximum amount of EUR 500.000)
Partnership with 12 commercial banks
1. SOWALFIN, who we are
Seller : a company located in Wallonia (added value, employment in Wallonia)
Buyer : a legal entity located in Belgium
Strategy of the buyer : Maintain and develop the existing activity in Wallonia
Financing : made by on of the 12 commercial banks located in Belgium having
signed an agreement with SOWALFIN
2. Business transfer over the last 10 years
Guarantee Cofinancing
644 projects 300 projects
Issued guarantees : 131,7 millions Subordinated loans : EUR 53,6 millions
Bank loans covered : 292,7 millions
In 2017 : 118 projects – EUR 23,3 millions issued guarantees
In 2017 : 41 projects – EUR 6 millions subordinated loans
• Innovfin and COSME guarantee agreements signed in September 2015
• Support of the European Fund for strategic Investments (EFSI)
• Objective : 600 SME’s supported over a period of 3 years – issued
guarantees of EUR 90 millions covering bank loans of EUR 145 millions
thanks to the counter-guarantee of EIF by 50%
• Results as of March 31, 2018 : 453 SME’s supported – issued guarantees
of EUR 88 millions covering bank loans of EUR 175,7 millions
• Business transfer eligible under these two agreements
• Two new agreements signed in March and April 2018 for a new period of 2
years under InnovFin and 3 years under COSME
3. Partnership with EIF
4. An example
Construction company - Management buy in through a newco
Negotiated price : EUR 2.000.000
Risk between the different financing sources well balanced
20,00%
10,00%
36,25%
22,50%
11,25% Buyer
Seller
Bank
SOWALFIN
EIF
Laurent Wenric, International Finance Advisor SOFINEX, Groupe SOWALFIN
SUMMARY
1. SOFINEX
2. Example of guarantee
3. Example of direct financing
Main products:
• Guarantee to cover Belgian bank loans allocate to
finance exports and foreign investments
• Direct financing (mostly debt) to finance
foreign investments and exports
1. SOFINEX
Financial support for Walloon
exports and foreign investments
The Walloon company may face difficulties borrowing the necessary funds from a Belgian bank as its target is not located in Belgium.
SOFINEX can give a guarantee (max. 75%) to the bank to facilitate the loan approval needed to finance the acquisition.
2. EXAMPLE OF GUARANTEE
SOFINEX
Belgian bank Walloon
company
Foreign
target*
Abroad Wallonia
Guarantee
M/LT Loan
Newco
* Any cross-border operation supporting growth is eligible to a SOFINEX intervention (company acquisition, assets purchase, real estate, JV,…)
The Walloon company may face difficulties borrowing the necessary funds from a Belgian bank as its target is not located in Belgium.
Besides guarantee, SOFINEX can also directly grant a credit (max. 50%) to the Walloon company, as long as other private partners are involved in a similar way.
3. EXAMPLE OF DIRECT FINANCING
SOFINEX
Bank, lender
or investor
Walloon
company
Abroad Wallonia
M/L T (subordinated) Loan
Financial contribution at least similar to SOFINEX
Foreign
target*
Newco
* Any cross-border operation supporting growth is eligible to a SOFINEX intervention (company acquisition, assets purchase, real estate, JV,…)
Questions?
Thank you very much
for your attention
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