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EIF, CDP and Muzinich & Co. enter into a new 150 million euro agreement to support European SMEs and Mid Caps

  •  
    Date: 08 February 2022
  • Acting as anchor investors, the European Investment Fund (EIF) and Cassa Depositi e Prestiti (CDP) will invest 100 million and 50 million euro, respectively, in Muzinich Diversified Loans Fund II
  • The fund aims to raise one billion euro to support over 100 European Small and Medium-Sized Enterprises (SMEs) and Mid Caps, allocating resources amounting to at least 200 million euro to Italy
  • The EIF contribution is backed by the European Guarantee Fund (EGF), part of the European Union's 540 billion euro package to address the economic impact of COVID-19

One billion euro for new growth and financing opportunities to over 100 European SMEs and Mid-Caps affected by the economic impacts of the pandemic. This is the aim of the Muzinich Diversified Loans Fund II, wherein the European Investment Fund (EIF) and Cassa Depositi e Prestiti (CDP) undertook to invest 150 million euro in total (50 million euro from the EIF and 100 million euro from CDP, respectively).

After the success achieved with the Diversified Lending Fund, in which both EIF and the CDP were cornerstone investors, Muzinich is launching a European-wide successor fund based on parallel lending, an alternative finance instrument alongside the banking channel, which aims to raise 1 billion euro to support development plans and access to credit for SMEs and Mid Caps on the continent affected by the impacts of the pandemic. The fund will invest at least 200 million euro in Italy, equal to double the resources made available by CDP.

In keeping with the strategy pursued by the previous fund, the Muzinich Diversified Loans Fund II bases its investment decisions by making use of consolidated fundamental and quantitative models and state-of-the-art proprietary Artificial Intelligence and Deep Learning tools, thus continuing to facilitate the launch and development of the parallel lending strategy in Europe and supporting the capital market for European SMEs and Mid-Caps.

The resources invested by the EIF are backed by the European Guarantee Fund, part of the European Union's 540 billion euro package to address the economic impact of COVID-19.

Alain Godard, Chief Executive of the EIF, added: ''Following the success of the Diversified Lending Fund, the EIF is delighted to join forces once again with Muzinich to provide financing at favourable conditions to European small and medium-sized companies. SMEs are key to foster innovation, growth and employment, and the European Guarantee Fund was designed to provide these companies with the funds needed to overcome the economic crisis caused by the pandemic.” 

Supply chain disruptions continue to weigh on the recovery of European SMEs. Thanks to the EIF commitment in the Muzinich Diversified Loans Fund II, we will support the business and liquidity needs of over 100 European SMEs, backing their medium to long term development strategy,” added Gelsomina Vigliotti, Vice-President of the European Investment Bank.

Dario Scannapieco, Chief Executive Officer of CDP, said: “Thanks to this transaction, CDP continues to facilitate access to credit for SMEs and Mid Caps affected by the impacts of the pandemic, including through the use of innovative finance instruments. This is also testament to CDP's continued commitment in support of investment plans in innovation, sustainability and international growth for SMEs and Mid Cap, in line with the objectives of the 2022-2024 Strategic Plan''.

Filomena Cocco, President of Muzinich & Co. SGR, said: “Since the end of 2018, the first fund (DLF I) has completed over 80 transactions, without default and without payment holidays. Key differentiating factors are the innovative proprietary AI and Deep Learning tools, developed over the last two years, that the fund will use to complement the investment and risk management processes that we use in our private strategies. With this initiative, we confirm our commitment to financing European SMEs. Now that the parallel lending paradigm has been successfully tested, we will roll it out across a broader universe of European companies. We have been investing in corporate credit for more than 30 years and have always relied on deep fundamental analysis to select our investments. The addition of our proprietary tools will enable us to deploy the capital quickly and efficiently, allowing us to channel significant financial resources into a large number of creditworthy SMEs across Europe.”

Gianluca Oricchio, CEO at Muzinich & Co. SGR, added: “The Italian investment platform has been expanded and further strengthened and today SGR manages more than US$900mn across three private market strategies: parallel lending, alternative lending and capital solutions. The Milan-based platform employs 12 senior investment professionals with an established track record and long international experience. SGR is fully integrated within the firm’s global investment platform that operates across Europe, Asia and the US. DLF II is managed by a team of senior investment professionals based in New York, Madrid, Paris, Frankfurt and Milan. We are proud to expand the parallel lending model across Europe and hope to replicate its success on this wider scale.”

Background information:

The European Investment Fund is part of the European Investment Bank Group. The EIF designs and develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. The EIF is also active in supporting Climate and Infrastructure fund investments with a strong focus on climate action & environmental sustainability. Through its activities, the EIF fosters EU objectives in support of countering climate change as well as fostering innovation, research and development, entrepreneurship, growth and employment.

The European Guarantee Fund (EGF) was created by the EIB Group with contributions from EU Member States to protect companies that are struggling in the crisis caused by COVID-19. With almost 25 billion euro in guarantees, the EGF allows the EIB and EIF to swiftly offer companies, mostly SMEs and mid-caps, access to loans, guarantees, asset-backed securities, capital and other financial instruments. The EGF forms part of the package of recovery measures put in place by the European Union, with the objective of providing a total of 540 billion euro to support the hardest hit sectors of the EU economy.

Cassa Depositi e Prestiti is a National Promotional Institution that has been supporting the Italian economy since 1850. Through its operations, it is engaged in accelerating the industrial and infrastructural development of the country, so as to contribute to its economic and social growth. CDP focuses its activities on regional sustainable development, as well as innovation and growth, including internationally, of Italian companies. It is a partner of Local Authorities, with loans and advisory services, for the creation of infrastructures and for the improvement of services of public utility. In addition, it is active in the field of International Cooperation to fund projects in developing countries and emerging markets. Cassa Depositi e Prestiti is funded totally by private resources, through the issue of postal bonds and passbook accounts and through issues onto the national and international market.

Muzinich & Co. is a global, institutionally focused asset management firm specializing in both public and private corporate credit. Founded in New York by George Muzinich in 1988, and active in Italy since 2014, the company is now present in 10 countries. It has over 240 employees distributed throughout the United States, Europe, Asia and Australia and manages c.US$43 bn of assets (as of 31st December 2021).

This material should not be relied upon as an investment forecast, research or advice, and is not a recommendation, offer or solicitation to purchase or sell any securities or to adopt an investment strategy. The opinions expressed by Muzinich & Co are updated as of January 2022 and are subject to change without notice.

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Lorenzo Squintani, tel.: +352 691 285 772, l.squintani@eib.org - Follow us on Twitter@eif_eu

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