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21 April 2015

BPIfrance flies high

Profile: BPIfrance

Author: James Mawson, editor-in-chief

France’s main agency supporting private entrepreneurs and venture capitalists ended the year on a high note both at home in Europe and more widely. At its 20th anniversary celebration in November, BPI-france’s Capital Invest conference celebrated the international as well as innovation and fundraising activities. It called for bigger fund managers and a more international shareholding structure.

A month later and BPIfrance, the public investment bank of France, and the European Union member state-backed European Investment Fund (EIF) signed a memorandum of understanding to co-invest up to €600m ($720m).

The investments will focus on French small and medium-sized businesses along with mid-caps with the total of all investments being between €500m and €600m over four years. In addition, there is training aspect in the memorandum to aid local managers.

France has long supported closer venture integration.

BPIFrance increased its stake in the EIF to 2.3% in the autumn and, as Pier Luigi Gilibert, chief executive of EIF, said: “This agreement is a further step in the successful cooperation of more than 15 years between BPIfrance and the European Investment Fund.”

Last summer, France and China raised €460m ($630m) for a joint, government-backed private equity fund.

The Cathay Midcap Growth Fund III was expected to finally raise €500m, after its initial backing from state-backed BPIfrance and China Development Bank (CDB).

Haibin Fan, president of China Development Bank, at the time said: “Chinese companies will be able to benefit from advanced technological expertise which is well-developed in France, while, in turn, French companies will gain from increased exposure to the booming Chinese consumption market.”

And in the autumn, BPIfrance, the largest investment bank in Europe with more than $25bn under management, opened a US branch, headed by Romain Serman, former French consul general in San Francisco, to commit to local VCs, co-invest with them and find investors for France-based companies.

All the international plans are designed to support France’s economy, with Fleur Pellerin, the minister responsible for SMEs, Innovation and the Digital Economy, in January 2014 confirming BPIfrance would play a central role in supporting the country’s strategy for startups and entrepreneurs, formalised under the name “Metropole French Tech”.

France’s ambition has been to train French champions in the image of Criteo, the French specialist in internet advertising that listed on the Nasdaq stock exchange in the US in October 2013.

As Pascal Lagarde, executive director of BPIfrance, in charge of international, strategy and development studies and a member of the EIF’s board, said about the EIF partnership: “This agreement significantly strengthens the alignment, synergies and effectiveness of national and European instruments to support the players in the French private equity.”

Daniel Balmisse, executive director of BPIfrance in charge of fund of funds, added: “This agreement should contribute to enhanced efficiency for managers of funds with a combined investment of EIF and of BPIfrance. It is important to note that the EIF and BPIfrance keep their own autonomy of investment decision. “

But the main focus for BPIfrance is its domestic industry, particularly the mid-sized companies (ETIs in French). Its study of the previous 20 years showed venture-backed companies had a 96% survival rate after the first three years and grew by between 2.5 and five times.

Also at the end of 2014, BPIfrance said it would invest in local accelerators to allow them to help more startups; launched Cap Innov’Est, a multi-sectoral seed fund with €36m to help start companies located in the regions of Alsace, Burgundy and Franche-Comté, and a €150m mezzanine fund (Croissance Mezzanine).

While its figures for 2014 have yet to be fully revealed it was expected to be 30% more substantial than 2013’s. 2013 had seen €1.3bn invested by the partners funds and funds managed by BPIfrance in 846 SMEs.

This 2013 figure was split into national and regional funds investing €970m in 466 companies and €125m in 320 companies, respectively, with a €223m from Bpifrance-managed funds in 132 companies.

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