BNP Paribas Asset Management plans UK SME direct lending fund launch

The firm has recently made a number of moves into alternative finance and fintech as it looks to become a significant player in the non-bank lending market.

BNP Paribas Asset Management, which has €569bn of assets under management, will launch a specialist UK SME direct lending fund as the firm continues to rapidly develop its private debt and real assets business, the firm has said in a statement.

The BNP Paribas UK SME Debt Fund 1 will look to offer institutional investors exposure to loans originated to small and medium sized UK firms, an area of the market many now see as underserved by traditional financial channels such as banks.

It will invest in senior loans to SMEs with an annual turnover of less than £50m, originated via BNPP AM’s SME Alternative Financing platform.

In the past year or so BNP Paribas Asset Management has launched a variety of strategies into the alternative finance and fintech lending world starting with taking a 10 per cent stake in alternative SME credit specialist Caple in November 2017. In February 2018 it launched an alternative finance investment fund in order to make more minority stakes in fintech and insurtech start-ups, as well as in AI, blockchain and cybersecurity.

It then fully launched its first SME lending fund aimed at the French market ahead of a full launch of its a new SME Alternative Financing platform, part of its Private Debt & Real Assets investment group in June.

Earlier this month it announced a strategic alliance with CODE Investing, a UK based fintech lending platform as it begins to build out origination channels as well as lending out cash with its own in house team.

Stéphane Blanchoz, Head of SME Alternative Financing at BNP Paribas Asset Management, speaking exclusively to AltFi shortly after said the firm wants to originate €1bn to European SMEs per year.

Blanchoz says since the global financial crisis there has been a paradigm shift in the market as new funding models have emerged.  

“Banks remain a key feature of the SME lending market and investment funds have traditionally been providing financing in the upper end of the mid-market area, while smaller companies are increasingly accessing finance through fintech crowdfunding solutions or peer-to-peer lending,” he said on the news of this latest fund launch. 

“We are targeting SMEs between these two market segments, where there are opportunities for businesses to contribute to UK GDP growth, but where sustainable funding solutions are limited,” he added.

Philip Dawes, Head of UK Sales (UK & Ireland) at BNP Paribas Asset Management, said: “BNP Paribas UK SME Debt Fund 1 represents an extension to our private debt and real assets capability, an area of continued interest to our clients.  SMEs continue to play an important role in the real economy in the UK, in terms of employment, growth and innovation.”

“The launch of this fund is therefore consistent with our aim of offering impact investment solutions for our clients, by providing sustainable capital solutions to a segment of the market that remains underserved by other financial solutions.”