BNP Paribas Asset Management has launch a new UK SME direct lending fund to support the ‘underserved’ market.
The vehicle, BNP Paribas UK SME Debt Fund 1, will invest in senior loans to SMEs with an annual turnover of less than £50m, that have been originated via BNPP AM’s SME Alternative Financing platform.
By using big data technology and the bank’s balance sheet and infrastructure, SMEs will have access to a sustainable source of funding.
BNP Paribas Asset Management head of SME alternative financing Stéphane Blanchoz said, “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.
“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.”
BNP Asset Management has been forming strategic partnerships to support the origination of SME loans, with a deal with SME lending platform CODE Investing closing earlier in the month. Through the alliance, BNP will invest into small business loans originated on the CODE platform.
Last year, the institution picked up a 10 per cent stake in alternative credit provider for SMBs Caple to support its own efforts in the space.
BNP launched its SME Advanced Solutions platform last year, with an aim to source loans from a selection of origination platforms and distribute them to investors. It operates a robust credit risk framework and is focused on senior unsecured fixed rate loans of between €0.5m and €5m.
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