Investors' Interview - Sylvain Makaya - Partner at Idinvest
Partner at Idinvest
Can you introduce us to your asset management company IDINVEST ?
IDINVEST is an asset management company that finances SMEs with over eight billion euros assets under management, divided into three divisions. The first pole manages around €2 billion dedicated to financing innovation, which finances European SMEs in series A and B. The second pole, which weighs €2,5 billion, is our historical pole at IDINVEST, which is called a fund of funds, and which finances private equity funds, secondary operations and co-investment operations. The third pole is dedicated to private debt and weighs about €3,5 billion. In this latter pole, there are three sub-poles: one dedicated to senior debt, which provides debt to SMEs as a bank would do. The second division provides mezzanine and unitranche debt, and the third one is an asset financing division that finances industrial SMEs.
Why did you choose private debt to finance SMEs?
For us, private debt has three main advantages. The first advantage is that there is no intrusion into capital. This is very important for SME founders who sometimes find that funds are intrusive and are there to enter the capital and hinder management. The advantage of debt is that it does not have any control over capital but only supports the development of the company. The second advantage is the possibility of lease back operations, which is a form of asset-based debt that is not offered by banks. We enhance the equipment already in place and invest in new equipment, thereby injecting cash into the SME that uses it to develop. The third advantage of debt is that it allows SMEs to develop through acquisition debt. This allows a company to acquire a foreign competitor and thus develop on an international market. This debt is more expensive than bank debt but can be part of a SME's development strategy, and above all makes it possible to go beyond debt ratios if the SME has reached its maximum debt ratio with banks.
How can a platform like FirmFunding help develop this market ?
Today, the problem for an investment fund like IDINVEST is not so much to raise funds, which, given our track record, is done relatively well. The real issue for us is to spend the money entrusted to us correctly. It is therefore necessary to know how to identify the right SMEs through efficient sourcing channels. A platform like FirmFunding allows us to enrich our sourcing networks and improve their quality. In addition, exchanging with experienced players in the SME market allows us to have a first filter of files, which will then be pre-qualified
Why are you interested in SME financing ?
The first reason is purely economic. It is important to know that we can make as much money, if not more, by financing SMEs than large companies. SMEs are the economic lifeblood of value creation in France and Europe, much more so than large groups, often based abroad and creating value abroad. We are in contact with these SMEs, often based in the regions, through France Invest. It is very important for us to lead this network of SMEs and to boost interactions between regions. Not only financially but also to promote an ecosystem that is conducive to development, through services, for example, that will enable them to develop internationally. It also allows European SMEs to develop on our territory.