Inflation, SMEs, recovery: our interview with Olivia Grégoire, Minister Delegate for SMEs

Minister, inflation is currently at the centre of all concerns, what about SMEs? In what ways are they impacted?

SMEs are on the front line of inflation. What for? Because SMEs are less equipped to negotiate the prices of their raw materials. SMEs also have less access to hedging mechanisms, and are therefore directly affected by input increases, which they have to pass on in their prices. The government is very mobilized. On Thursday 8 December, I also brought together all the supermarket chains and two federations representing many SMEs to conclude an unprecedented commercial solidarity pact by which distributors undertake not to negotiate increases linked to the increase in energy prices of SMEs that play the transparency card on these increases. 

You are very regularly on the ground to meet business leaders, do they feel confident and supported enough to get through this new period of difficulty?

I often say that the first engine of the economy is neither supply or demand, nor capital or labour, but confidence. It is therefore the first wealth that we try to cultivate, although it is true that it is always difficult in the context we know, with a tendency to be afraid whether it is about inflation or energy shortages. My job is to give clarity to entrepreneurs on what we do so that they have visibility on what they can do. That is why, for example, I have tried to simplify energy aid for SMEs as much as possible: today, an aid desk that operates solely on the basis of invoices; Tomorrow, a shock absorber that will come to take a share of the bills at source, with almost nothing to do. But, as Sartre said, "trust is earned in drops and lost in liters", so it should never be taken for granted.

The "Relance" label has made it possible to direct savings towards the long-term financing of companies after the COVID crisis. Does it also help consolidate their cash flow in the face of inflation?

The objective of the Relance label was to distinguish investment funds that invested in French companies, including VSEs, SMEs and ETIs that are by construction recipients of part of this financing, in order to strengthen their equity[1] or provide them with cash support in the form of bonds or participating loans. The label was a success: 232 funds were labelled, representing more than €22 billion in outstandings. This success shows that there is a real interest from investors and individuals to invest their savings in the financing of our local businesses.The idea of investing in French companies anchored in our territories is important for savers and investors. As Minister for the Local Economy, I am delighted about this. I am also committed to the fact that sustainability criteria have also been taken into account as a condition for funds to be labelled 'Recovery'. In addition to helping to consolidate companies' cash flow in a period of inflation, the capital invested by the Recovery funds has also contributed to supporting companies in their environmental transition, which is now a necessity.

Recovery Bonds were recently launched, what is the purpose of these new investment vehicles?

Like the Relance equity loans (PPR) that preceded them, the Recovery Bonds (OR) aim to strengthen the financial situation of SMEs and mid-caps, to support their investment capacity. Launched a few months after the PPR, at the end of 2021, the ROs are aimed at French SMEs and mid-caps that wish to invest and develop despite a balance sheet deteriorated by the health crisis, and who do not wish or are not in a position to open their capital to external investors. They take the form of bonds redeemable at maturity, with a maturity of 8 years. The bonds were built so that they benefit in part from a state guarantee, which will cover the first losses up to 30% of the initial outstanding. They are a real success: at the end of November 2022, about €1.4 billion of gold had already been disbursed or were under investigation. I am pleased with this dynamic, which testifies to the relevance of this product to meet the financing needs of French SMEs and mid-caps. 

Asset management companies are at the heart of investing in listed and non-listed companies, what message would you like to send them?

Asset management companies play a fundamental role in the financing of our businesses. It should first be remembered that French management is the leader in continental Europe, with more than €4,800 billion in assets under management. This situation is a key asset for the financing of our companies, which must be able to mobilize these savings to grow in the long term. In the particularly difficult economic context we are experiencing, our companies need the confidence of managers more than ever. In this respect, we are making every effort at European and national level to promote investment in the real economy, including through funds open to the public: this is the objective of the ELTIF[2] regulation on long-term investment funds, which has been a priority of the French Presidency of the EU and is currently being finalised.

In this context, my message to asset management companies is simple: be actors in the transformation of French companies! Help them make the transition to the necessary transitions! On the environmental front, in particular, France is fully mobilized to clarify the rules on sustainable finance and thus give managers the means to direct savings in favor of the ecological transition. It is also up to management companies to engage in dialogue with issuers to support them in their transition. It is together that we will get there!

Photo © Gezelin Gree

Termes et définitions
1. equity. Equity est un terme qui désigne une forme d’investissement à long terme dans une entreprise. Lorsqu’un investisseur achète…
2. ELTIF ( ELTIF ) ELTIF est l’acronyme pour “European Long-Term Investment Fund”, soit en français “Fonds d’Investissement à Long Terme Européen”. Ces…
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