Mobilising Private Capital, Special Purpose Vehicle Circular Economy - Finance Workshop 23 June 2015

Transcription

1 Mobilising Private Capital, Special Purpose Vehicle Circular Economy - Finance Workshop 23 June 2015 JUNE 2015 Membre du Groupe AVERTISSEMENT : Les informations contenues dans ce document sont uniquement transmises à titre d'information. Ce document est strictement confidentiel et établi à l'intention exclusive de ses destinataires, investisseurs professionnels au sens de la Directive MIFID et visés aux articles L du CMF et du RG AMF. Toute utilisation ou diffusion non autorisée, en tout ou partie et de quelque manière que ce soit, est interdite et passible de sanction. La Française, ACOFI et leurs filiales déclinent toute responsabilité en cas d'altération, déformation ou falsification dont ce document pourrait faire l'objet.

2 INTRODUCTION The disintermediation results from two concomitant shocks: - The unprecedented (and sustained) compression of yields; - The simultaneous and far-reaching regulation of the banking (Basel II) and insurance (Solvency II) industries. Renewed interest in direct or alternative financing of the economy by institutionals and non-banking players. Versus a lowering banking offer for certain types of funding Alternative financing of the economy, directly or through regulated loan funds, 2

3 DISINTERMEDIATION MACROECONOMIC AND PRUDENTIAL CONTEXT Major change to the regulatory and prudential framework, post-2007/2008 financial crisis Alignment of two "planets": Basel 3 régulation for Banks Solvency 2 régulation for insurance compagnies 3

4 THE CONSTRAINT OF YIELD COMPRESSION An unprecedented situation with painful consequences for institutionals and professional investors A consequence of concerted action by central banks to stave off the threat of inflation with the risks of asset inflation (the "bubble" phenomenon") Unprecedented levels Recent decisions by the ECB (QE and OMT): over EUR 1,100bn of asset purchases by September 2016! Desperately low market interest rates - for the long term 4

5 THE CONSTRAINT OF YIELD COMPRESSION 5

6 THE CONSTRAINT OF YIELD COMPRESSION HISTORICAL YIELDS Source : Allianz GI Yield - Feb 2015 Historique

7 DISRUPTION OF BUSINESS MODELS Banks/Institutionals investors "Originate to Distribute" vs "Invest to Lend" Securitisations back in investors' favour Parallel development of two approaches to securitisation "Bank" securitisation is originate to Distribute " "Investor" securitisation is "invest to lend" Disruption of institutionals' asset allocation strategies Diversity of operating methods 7

8 FINANCING THE ECONOMY THE DISINTERMEDIATION A regulated movement, encouraged by the public authorities Two complementary approaches: "Disintermediation" (large transactions, B2B) and "re-intermediation" (loan funds, Crowdfunding, EuroPP, etc.). The second is preferred for unlisted entities and medium-size deals. Trend facilitated by the clarification opening up of the regulations for alternative lenders AIFM Directive, Legislative reform (insurance, SS etc.) between August 2013 and December 2014 Knock-on effect on other institutions (AGIRC/ARRCO, ERAFP, FRR, etc.) Regulated non-bank financing vs "shadow banking" 8

9 SPECIAL PURPOSE VEHICULE : GENERAL PRINCIPLES Loan Funds Fonds de Prêts à l Economie Liabilities of the loan funds Low risk of a conflict of interests French regulations specific to Funds Fonds de Prêts à l Economie European long term investment funds ELTIF Adopted 20/04/2015 To boost European long-term investments in the real economy, especially infrastructure Large range of eligible assets Regular Income versus liquidity 9

10 A RESPONSE TO INSTITUTIONALS' NEEDS Loan funds constitute an asset class that meets the needs of institutionals in the context of Solvency II. Investors' interest in alternative financing against a backdrop of compressed yields: funds and mandates, direct intervention in balance sheets... Attractiveness of the risk/return ratio of the "loan" asset class and their inherent diversity, reflecting a complexity premium (lack of access to these new risks) and an illiquidity premium. 10

11 A new type of "lender/borrower" relationship FINANCING THE REAL ECONOMY The learning curve for working with alternative lenders Borrowers (corporate/local authorities) must: Understand/take into account their scores (FIBEN, etc.) and in the future, their ratings Deal consistently with their bank and non-bank creditors that refuse to be subordinated de facto (guarantees, access to information) Accept standardised workflows and contracts The "new lenders" must learn: To make themselves well known and To indicate precisely the niches in which they operate (sector, size, "counter" opening times, contractual and financial conditions, etc.). 11

12 ACOFI Asset manager regulated by the AMF, specialist AIFM manager 25 experienced professionals from the asset management and investment banking world Signatory of PRI Principles for Responsible Investment since 2015 Two areas of expertise: (1) management of real assets and (2) direct loans to the economy (funds or specialised mandates) Four finance and investment themes and 10 funds for 1,4 B : Commercial real estate loan funds in Euro Zone) 4 Funds Infrastructures (renewable energy and efficiency ) mainly France 1 Funds Corporate Public sector (local authorities and national health services)1 fund Strategic partnership with Groupe La Française (Autumn 2014) 12