French asset management association AFG has released a whitepaper in which it details proposals to develop the financing of French small and mid-sized enterprises (PME and ETI).
The publishing of this whitepaper comes after a mission conducted by Christophe Bavière, chairman of the private equity committee at AFG.
Small-sized enterprises (PME) represent 47% of all jobs in the French economy while mid-sized firms and large companies account for 24% and 29% respectively according to data of the French ministry of Economy.
An issue highlighted by AFG’s whitepaper is that most French small-sized enterprises do not turn themselves into mid-sized companies as their development remains dependent of bank loans that are set up for five to seven years only in most cases and that serve primarily to cover treasury needs.
Some 20 proposals have been developed around four pillars by AFG :
- reversing regulation that either forbid or constrain the share of French PME and ETI’s investments in retail savings as well as in institutional clients portfolios;
- driving more savings products towards the financing of PME and ETI;
- speeding up the process of French PMEs’ debt financing by asset managers;
- establishing a framework that is favourable to the financing of these companies.
Among proposals, AFG outlines the creation of a pan-European private equity framework and the establishment of long only funds for retail investors that could invest both in listed and non-listed stocks with a bucket up to 30% invested in illiquid assets such as private equity, real estate or infrastructure funds.
Also it pushes for the reintroduction for French funds (OPC) of a 10% investment ratio in private equity funds which has been removed in 2012.