The 2013/04/16 at 08:01
They accounted for 695 million euros in 2004, 1.31 billion euros in 2007. Then came the economic crisis years that did not, however, slow down their progression: 1.6 billion in 2008, 2.3 billion in 2010, 2.9 billion euros in 2011… Growth-capital investments have carved out a comfortable spot for themselves in the landscape of company-project financing. Yearly sums have increased by an average of 14 % since 2000. Whether it is a matter of launching a new product, geographically expanding an offer, or setting up an external growth project, an increasing number of SMEs now benefit from this solution.
960 companies took recourse to capital investment in 2011, compared to 779 in 2009, 707 in 2008, and only 557 in 2007. Almost 60 % of companies using private-equity solutions have been supported by growth capital. A trend naturally explained by the reticence of banks to grant loans.
Like venture-capital players that accompany young structures sometimes in existence for only a few months, growth-capital companies accompany company heads wishing to propel their companies to a higher level. This solution finances growth projects of already-established SMEs that do not wish, or cannot, take recourse to debt, as they are too modest in size, do not benefit from an adequate financial background, or find themselves overly exposed to sectorial risks.
Aware of the importance of this phenomenon, Chambers of Commerce are setting up solutions on a local level, in conjunction with public and private backers, to bring concrete responses to SMEs looking for new means of financing. Within the Rhône-Alpes region, the Place d’Échange has emerged to support local enterprises with development projects. This is a “laidback” platform where investors are invited to back initiatives characterised by their long-term nature. Beneficiary SMEs have the opportunity to raise their capital by 200,000 to 800,000 euros – a capital rise that is neither too weak or too strong, privileging a gradual take-off of activity, over time.
Denis Feuillant, Adviser at the CCI of Lyon in charge of the Place d’Échange, considers that “there are enough investors in our region wishing to invest in such projects characterised by a serene approach”. Place d’Échange is aimed at all enterprises that have more or less reached their first stage of development (a minimum of four years).
Growth-capital players tend to target mature and profitable enterprises. In the past, many funds of this type addressed companies with five years of existence behind them, making a turnover of at least 5 million euros, and producing at least 5 % in net profits. Today, the sector is characterised by a few mutations making access criteria less severe. Many venture-capital players have geared themselves towards growth capital in the last two to three years. Amongst the new players, regional funds are multiplying. According to Denis Feuillant, “beyond bank financing difficulties that may confront enterprises, there is a desire not to invest due to fear, which is a worrying element.” In this way, the idea of offering reasoned growth-capital solutions as is the case of the Place d’Échange, where the inherent level of risk in company projects is reduced, appears pertinent.
The soar of growth capital takes place in a context where there is a multiplication of initiatives for providing financing, such as Oséo Industrie, a recent subsidiary of Oséo endowed with around 1 billion euros in capita.l With the creation, in 2010, of the JEREMIE (Joint European Resources for Micro to Medium Enterprises) fund, the Auvergne region was one of the first to set up alternative financing solutions. This initiative is supported by the European Union and managed in conjunction with the regional Chamber of Commerce. Over 5 million euros have been made available to some one hundred companies.
At a more upstream level, the Institut Régional d'Investissement Industriel (Regional Institute for Industrial Investment), set up around thirty years ago in the Midi-Pyrénées region, cleared the way in this domain, in partnership with the Aquitaine region and the Caisse des Dépôts et des Banques (Deposits Fund). But the orientation of funds towards the growth capital of industrial companies is a relatively recent evolution. Today, the Institute manages about 100 million euros in assets in France’s Grand Sud-Ouest (Greater Southwest) and invests an average of 10 million euros every year.