The health crisis has created real difficulties for SMEs, which are struggling to project themselves in a highly uncertain economic climate. Many managers have chosen to open up their company's capital to investment funds, to take advantage of their support capabilities.
Numerous investments despite the confinement of spring 2020
According to a study by France Invest, the Association des Investisseurs pour la Croissance, "private equity firms continued to be very present in the 1st half of 2020, helping companies to finance their development".
In the words of Chairman Dominique Gaillard, "unlike the 2008-2009 crisis, when amounts raised and invested collapsed, activity at the start of this year has remained very buoyant".
In the first half of 2020, for example, 7.7 billion euros of funds were allocated to 1,050 start-ups, SMEs and ETIs, more than the half-yearly average since 2017, despite the economy coming to a near-total standstill during the confinement of spring.
In the second half of 2020, business picked up again, and 2021 looks set to be just as dynamic in terms of investments.
SMEs attracted by investor support
The success of private equity among investors in this period of health crisis is due in particular to the many public support schemes for businesses, which are creating an influx of liquidity, and to very low interest rates.
Whether mutuals, foreign pension funds or insurance companies, the majority of these investors preferred to reinvest in their portfolio companies rather than target new ones. Capital Finance reported 182 leveraged buy-outs in 2020, compared with 244 in 2019.
The healthcare and digital sectors attracted many investors, in contrast to the tourism and aeronautics sectors, which were severely impacted by the Covid-19 pandemic.
If investment funds are so attractive to SME owners, it's not only for the financial aspect, but also for the support they increasingly offer in terms of ESG indicators, i.e. environmental, social and governance issues.
These investors also intend to take part in the stimulus plan, through long-term equity loans booked as quasi-equity.