What do life sciences firm Sofinnova Partners, tech investor Cathay Capital and financial services-focused firm BlackFin Capital Partners have in common? French state investment bank Bpifrance has been a consistent backer of their funds for years.
“Bpifrance’s fund of funds team has had a very important role in backing the whole venture capital ecosystem in France, and has been a very strong long-term partner for Sofinnova since 2012,” Antoine Papiernik, chairman and managing partner at Sofinnova, tells Private Equity International. The life sciences firm has about €2.5 billion of assets under management, and recently bagged a €1 billion investment from Apollo Global Management.
Papiernik also notes that Bpifrance has been an investor in almost all of Sofinnova’s funds.
“Having Bpifrance as a cornerstone investor is seen very positively by the LP community, and serves as validation for a fund”
Another of Bpifrance’s European GPs adds that the sovereign investor is well known for partnering with investors and entrepreneurs that share its will to shape the future and innovate sustainably. “It supports strategic enterprises with high-impact potential in sectors contributing to [solving] some of the greatest challenges of our times – for instance in health, decarbonisation, or artificial intelligence,” the GP says.
Bpifrance, which could not be reached for comment for this story, also calls itself a “bank” and “coach” for entrepreneurs, and invests in start-ups, small and medium-sized enterprises, and mid-cap companies through direct investment and fund of funds activity, per its website.
The state investment bank allocates some 34 percent of total assets, or approximately $38.9 billion, to private equity, according to our latest Global Investor 100 ranking. It placed 13th, just behind the Washington State Investment Board and the National Pension Service of Korea.
What’s it like being backed by Bpifrance? Papiernik says the investor is “very involved in fundraising, often taking one of the largest – if not the largest – LP positions in our funds”.
“In some cases, they have been early sponsors for new initiatives such as the Sofinnova Crossover Fund, our later-stage growth strategy launched a few years ago, which has now become the largest of its kind and the only one with a team solely dedicated to growth-stage biopharma and med tech companies in Europe.”
Papiernik says Bpifrance’s significant commitment allowed the fund to achieve a first close and helped convince other LPs to join. “In our experience, having Bpifrance as a cornerstone investor is seen very positively by the LP community, and serves as validation for a fund, particularly during fundraising.”
The European GP that PEI spoke with says Bpifrance encourages its managers to innovate in the field of PE and VC, and continues to be “extremely supportive” of new initiatives and the firm’s expansion into new areas. Case in point: Bpifrance had committed capital to this GP’s recently launched global healthcare fund, as well as to an early-stage fund focused on cryptocurrencies. It is also “pushing GPs to be at the forefront of ESG and impact”, the GP notes.
In many ways, capital from the French government is bolstering European venture capital to allow it to compete with US and Asian rivals. Bpifrance is one of the main allocators behind this movement.
“Over the course of the 10 years of our collaboration with Bpifrance, we have witnessed one successful partnership turn into many – a small impact grow to become considerable – and we have demonstrated reliably the multidimensional value created by our strategies,” the GP adds.
Abu Dhabi sovereign wealth fund Mubadala Investment Company has also teamed up with Bpifrance multiple times over the years. Its recent co-investment partnerships include the French Emirati Fund Partnership and the Innovation Partnership. The FEF Partnership, which is aimed at supporting, directly or through investment funds, the development of French enterprises, has been allocated €3.2 billion, while the Innovation Partnership, which is focused on investments in high-growth French technology companies and tech and VC funds, has been allocated €800 million, according to a statement.
European tech has blossomed in recent years due to a confluence of factors, including the emergence of companies that are market leaders, a self-sustaining and more mature tech and VC ecosystem, and value creation shifting from the public markets to private equity.
Last year was a record-setting one for Europe’s start-up scene, with overall deal value crossing the €100 billion mark for the first time, according to a report from PitchBook. Meanwhile, 203 VC funds raised €21.7 billion, up 10 percent from 2020.
PE for all
Bpifrance has also made moves to help PE become more accessible. In 2020, it had moved a 5 percent slice of its PE assets into a fund named Bpifrance Entreprises 1 and was inviting members of the public to buy exposure to it for a minimum investment of €5,000. The vehicle contains exposure to around 1,500 companies, most of which are French, held in around 145 funds and managed by about 80 GPs.
The state investor held a final close on the fund in May last year, with total investment capacity of €4.2 billion across equity and debt. Capital raised for the vehicle has been invested in businesses including speciality chemicals company Arkema and eyewear company EssilorLuxottica.
Last year, the LP made its PE retail offering even more accessible with Bpifrance Entreprises 2, with a lower minimum buy-in of €3,000. BE2, which is seeking to raise €100 million, will own a portfolio of 126 French PE funds that Bpifrance backed between 2010 and 2016, representing more than 1,500 unlisted domestic businesses. The vehicle will target an annual net return of between 5 and 7 percent, with a potential distribution from
the first year.