The announcement was expected. On Tuesday October 14, Bpifrance will formalize the launch of a new fund dedicated to investment in French companies in the defense sector. For the record, the general director of the public bank, Nicolas Dufourcq, made the proposal on March 20, at the Ministry of the Economy and Finance, during a day dedicated to investment in our “Defense Industrial and Technological Base (BITD)”. This “base” brings together nine large industrial groups and 4,500 SMEs and startups which produce partly or entirely for the armies.
It is in this second category of companies that the Bpifrance Défense fund will make it possible to invest, because it is a so-called private equitywhose aim is to provide financing to companies not listed on the stock exchange (VSEs, SMEs and ETIs). This new fund could thus bring together a portfolio of more than 500 unlisted companies. Among them, at least 70% French companies, but also undoubtedly 30% European nuggets in this same sector. All for a moderate entry ticket: from 500 euros, and without subscription deadline: the fund should be “evergreen”, that is to say without lifespan, therefore with the possibility “to invest as you go”had already clarified Nicolas Dufourcq.
Blocking of funds for 5 years, but the promise of a high return
On the other hand, after taking the plunge, you will have to accept real estate funds for a few years: the Minister of the Economy at the time, Bruno Le Maire, had mentioned a blocking period of five years. Before this period, it is impossible to recover the money invested, except in exceptional cases, in principle, as provided for in previous Bpifrance funds: death or disability of the unit holder, dismissal, etc. It will therefore not be a “liquid” savings product, which is in line with traditional private equity funds, on which it is advisable to only bet if you have six to ten years ahead of you.
For this medium-long term investment, the promise of performance will be high. Previous Bpifrance funds aimed for an unguaranteed target return of 8% to 10%, “net of management fees, but before tax”, specifies the public bank. A performance consistent with what one can usually expect from a “general public” private equity fund. This in return, however, for a high risk of capital loss: the establishment’s previous fund, Bpifrance Entreprises 3, was for example at 6 out of 7 on the risk scale, according to its key information document (DIC). This could also be the case for Bpifrance Défense, private equity funds generally being rated between 6 and 7 out of 7.
Finally, for interested investors, how can we purchase shares of this fund? Bpifrance Défense should be accessible “directly”, with the possibility of subscribing without an intermediary from the establishment, via its site. It is also possible that it will be open to life insurance contracts, or retirement savings plans (PER), through units of account (UC). This is the case for the first fund of this type to have seen the light of day on June 16, the Tikehau “Defense and Security” fund, available in the contracts of Société Générale Assurances, CNP Assurances and the Carac group.
