Investment Managers
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Testimonials from Sienna Investment Managers, asset manager, and Armisia Group, industrial SME.
With the war in Ukraine and the multiplication of risks, priority is given to rearmament. Concentrated in the hands of a few large groups, defence is also the work of thousands of SMEs and mid-caps looking for new methods of financing.
“We are now witnessing a paradigm shift in the defence industry.” For Olivia Noirot-Nérin, Investment Director in Corporate Debt at Sienna IM, Europe has emerged from the era of peace dividends and, faced with the steady decline in state defence spending since the end of the Cold War, financing the defence industry appears to be a necessity. In a world where China and Russia devote an exponential share of their GDP to armaments, and where the fields of confrontation are multiplying, the defence industry, which has been used to the long term until now, must respond urgently.
Ramping up production in a sector used to the long term
However, is a country like France, which has recently been very proactive, giving itself the means to respond to these new challenges? Awareness is one thing, but the ramp-up of the production tool is another, and in this area, the latency time is sometimes significant. This limit is confirmed by Alexandre Celier, CEO of Armisia Group, an SME specialising in mechanical tools for the aeronautics industry which generates 12% of its turnover in defence. At the moment, he says, it can take 10 years between the order of a Rafale and its delivery, even the first payment from the customer can take years to arrive or simply be postponed for budgetary reasons. These delays are aggravated by bottlenecks within the ecosystem of defence SMEs and mid-caps in France. All it takes is one “bad student” within the chain for the entire production to be restricted. Alexandre Celier cites the example of civil aeronautics, whose aircraft production is currently limited.
Private debt to finance defence SMEs and mid-caps
Under these conditions, how can we help defence players to increase their strength? For Sienna IM, this support involves financing European SMEs and mid-caps in the defence ecosystem (some 5,000 in France alone), including Armisia Group – an industrial fabric that is often partially addressed by banks for the benefit of the few giants in the sector. For these smaller players, the asset manager provides its private debt solutions aimed at covering their needs related to the increase in the order book, increasing their production capacity, or financing external growth projects. This expertise has directly financed more than 160 operations over the past 15 years for an amount of nearly €1 billion. Olivia Noirot-Nérin specifies that these private debt solutions offer “greater flexibility and speed of execution than banks, with a more tailor-made approach”. It gives a target range of 5 to 20 million euros for this type of financing, a formula that could interest Alexandre Celier, who is aiming for a future envelope of 8 million euros to continue to grow Armisia Group.
WARNING
This document is intended exclusively for professional investors within the meaning of MiFID II. It is provided for informational purposes only and does not constitute a recommendation, solicitation, offer or investment advice and should not be construed as such. The information contained in this document is communicated to you on a confidential basis and must not be copied, reproduced, modified or disclosed to a third party without the prior authorization of Sienna AM France. This document does not form the basis of a contract or commitment of any kind. The investment strategy presented in this document is in the pre-marketing phase, certain elements characterizing it are likely to evolve without notice and at any time until the finalization of the documentation and the marketing of the fund in compliance with the applicable rules in this area. All information and opinions contained herein reflect the current context and are subject to change at any time without notice. The management company does not accept any direct or indirect liability that may result from the use of any information contained in this document. The past performance presented in this document and the simulations carried out on the basis of them are not a reliable indicator of future performance. They are not indicative of the future performance of the investment strategy presented