Tailored funding with the Public Investment Bank 5 (December 2013)

The Public Investment Bank

France’s government has created a Public Investment Bank (Banque Publique d’Investissement – BPI) that offers companies, particularly SMEs and mid-cap companies, a tailored funding service with a wider palette of financial instruments and advice, to support companies at every stage of their development.

The BPI encompasses the Strategic Investment Fund created in 2008, OSEO, a fund for small business development set up in 2005, and the business lending arm of the Caisse des Dépôts et Consignations.

It will have €20bn in capital, giving it a lending capacity of €20bn, a further €12bn available for credit guarantees and €10bn for equity investment.

Its capital is twice that of the Strategic Investment Fund, and it is to be used as “an offensive tool”, according to Economy Minister Pierre Moscovici. Prime Minister Jean-Marc Ayrault has compared the BPI’s role to that of Germany’s public banking group KfW, which has distributed €14 billion to some 20,000 firms since 2009. Union officials will sit on a BPI national orientation committee with employers, to suggest areas of investment in medium-sized industry.

"The state investment bank will be a robust partner," M. Moscovici told a press conference, adding that it was "the first step in our policy to increase competitiveness and support businesses."
BPI’s Missions

The BPI has three main missions:

  • to lessen the impact of market failures that handicap companies’ funding, especially that of SMEs;
  • to invest in upcoming strategic sectors, such as the introduction of digital, eco-friendly and energy-efficient technology into industry and social enterprises;
  • to become a powerful financial lever to develop the French regions.

It also aims for simplicity and effectiveness in three respects:

  • single portals for public funding dedicated to SMEs and social enterprise players, to facilitate their development programmes and access to funding;
  • a new organization of companies’ public funding, with at least two functions: equity capital transactions, and loans and guarantees for SMEs;
  • the creation of an umbrella structure giving the state a new management capability. This body must determine the broad strategic objectives of the group, offer each region a partnership setting out its priorities and guarantee the coherence of the products on offer.

Innovation with OSEO

Since 3 January, a government guarantee, implemented by the Public Investment Bank, has enabled over €500 million to be provided to SMEs, through OSEO, the BPI’s innovation arm. OSEO awarded €650 million of funding for innovation in 2010, corresponding to almost €2 billion of investment made by the companies being supported. OSEO offers a range of direct funding such as interest-free loans, repayable advances and grants for innovative projects, and is the body responsible for implementing the innovation cluster structural programme (PSPC).

Since 13 February, the BPI has been able to pre-finance the R&D tax credit: SMEs will no longer have to wait a year before receiving this assistance. The up-front payments will improve the cashflow of innovating SMEs.

The BPI has also launched a new Innovation Loan to finance innovations in industry and trade.

Through its 90 regional funds and 38 regional establishments, the BPI already takes 90% of local funding and credit decisions.

(Sources: sites de la BPI, du Ministère de l’Economie, Financial Times : http://www.ft.com/cms/s/0/a3aadcae-1866-11e2-80e9-00144feabdc0.html#axzz2MgHPbt4V.)

Source : french embassy in UK’s website