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BNP Paribas and European Investment Fund launch EUR 10m fund for co-investment into Social Impact Bonds in the EU

  •  
    Date: 03 February 2020
  • This co-investment agreement will enable BNP Paribas and the European Investment Fund to invest together in SIBs structured by BNP Paribas within the EU
  • This fund is being launched under the Juncker Plan, and will make it possible for the EU to improve the access to finance of various social organisations and enterprises
  • Three SIBs already financed will enable more than 1 000 students to receive targeted support and prevent over 130 children from being placed into care

With a view to developing Social Impact Bonds (SIBs) across the EU and particularly in France, BNP Paribas and the European Investment Fund (EIF) are launching the BNP Paribas European Social Impact Bond Fund co-investment fund.

Management of this innovative and unique mechanism will be entrusted by BNP Paribas to its BNP Paribas Asset Management subsidiary, which has long-standing expertise in impact assessment and management of solidarity funds, with over EUR 2.3bn at the end of 2019.

An SIB is an original and multi-party financing tool promoting experimentation and prevention in social action and public policy, and also helps deliver savings for authorities. Investors pre-finance social innovation projects on the basis of ambitious social impact objective contracts, which are negotiated in advance with public authorities and one or more social sector players (social enterprises, associations, foundations, etc.). Where these objectives are met, the public authorities pay back or reward the investors according to the social impact achieved. If the objectives are not met, the investors are not paid back.

The EIF approached BNP Paribas to implement this co-investment agreement as it wanted to benefit from the latter's expertise in structuring Social Impact Bonds. The agreement enables two parties to co-invest the same amount in BNP Paribas-structured SIBs within the EU.

Since 2016, nine SIBs structured or co-structured by BNP Paribas in France or the US have been signed, totalling EUR 28m and in which BNP Paribas has invested EUR 8m. The EIF has been taking part in SIB development since 2015, initially in the UK (the most mature market) and then by participating in the structuring and investment of the two largest SIBs in the EU: KOTO SIB in Finland and SIB Joining Forces in the Netherlands. The EIF has invested a total of over EUR 26m in SIBs.

This co-investment agreement, deployed under the Juncker Plan (the European Fund for Strategic Investments – EFSI), is an opportunity for the EU to fulfil its social mission, which consists in improving access to finance for various social organisations and enterprises, with a view to supporting the development of the social sector and ultimately mobilising financing by crowding in private capital.

“The Social Impact Bond concept under the Investment Plan for Europe brings tangible benefits to some of the most vulnerable groups in our society. Already we have witnessed refugees in Finland being re-skilled and matched into jobs; and former military personnel being reintegrated into the workforce in the Netherlands. With this new SIB fund set up by BNP Paribas and the European Investment Fund, children and young people are already being protected, nurtured and encouraged to strive for more", said European Commissioner for Economy Paolo Gentiloni.

With this partnership, the EIF and BNP Paribas are helping to promote the innovative Social Impact Bond instrument. This investment will therefore make it possible not only to test innovative social actions to benefit the most vulnerable people and public policies, but also to attract more institutional investors and so help to develop the social economy within the EU, particularly in France,” added EIF Chief Executive Alain Godard.

“The Social Impact Bond is a sustainable finance innovation helping to place goals for the common good at the heart of the economy. We are working to develop it with our technical expertise in structuring and investment for projects. As a financer for all economic players, we are effectively at the crossroads of the various SIB stakeholders: investors, public authorities, social players, philanthropists, etc. We have therefore been able to meet the EIF's request and are delighted to be involved in this new partnership. We share the EIF's conviction that the SIB is a tool for the future, as it concentrates efforts on projects with tangible and measurable impacts making it possible to build an inclusive and sustainable society,” concluded Antoine Sire, Director of the Company Engagement department at BNP Paribas.

Three initial SIBs have already been financed by the BNP Paribas European Social Impact Bonds Fund: an SIB from Article 1 for improving school completion and the ambitions of agricultural school students in Hauts-de France and Occitanie, together with two SIBs from Fondation d'Auteuil in Loire-Atlantique and Gironde, aiming to prevent children being placed into care. Several others are being studied or structured in France, Belgium and Italy.

If the initial three SIBs met their social impact objectives:  

- Over 1 000 students will have benefited from targeted support to improve their ambition and school completion

- Over 130 children will have avoided being placed into care

This dedicated fund – unique in its field – therefore aims to promote social innovation via financial innovation, thereby closing a financing gap.

About the EIF

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized enterprises by helping them to access finance. It designs and implements venture and growth capital operations, as well as guarantee and microfinance instruments specifically targeting this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

About BNP Paribas

BNP Paribas is a top-ranking bank in Europe with an international profile. It operates in 72 countries and has over 202 000 employees, including more than 154 000 in Europe. The Group ranks highly in its three core areas of activity: Domestic Markets and International Financial Services (whose retail banking networks and financial services are grouped together under Retail Banking & Services) and Corporate & Institutional Banking, centred on corporate and institutional clients. The Group helps all of its clients (retail, associations, businesses, SMEs, large corporates and institutional) to implement their projects by providing them with services in financing, investment, savings and protection. In Europe, the Group has four domestic markets (Belgium, France, Italy and Luxembourg) and BNP Paribas Personal Finance is the leader in the field of consumer lending in Europe. BNP Paribas is also rolling out its integrated retail banking model across the Mediterranean countries and in Turkey and Eastern Europe and has a large network in the western part of the United States. In its Corporate & Institutional Banking and International Financial Services activities, BNP Paribas enjoys leading positions in Europe, a strong presence in the Americas and has a solid and fast-growing network in the Asia/Pacific region.

About BNP Paribas Asset Management

BNP Paribas Asset Management is the investment management arm of BNP Paribas, one of the world’s major financial institutions. It offers high added value investment solutions to individual savers, corporates and institutional investors, via a broad range of skills in four investment divisions: Equities, Fixed Income, Private Debt & Real Assets, and Multi-Asset, Quantitative and Solutions (MAQS). Sustainability is at the heart of BNP Paribas Asset Management’s strategy and investment decision-making process, making an active contribution to energy transition, environmental protection and the promotion of equality and inclusive growth. Its aim is to achieve long-term sustainable investment returns for its clients. BNP Paribas Asset Management has assets under management of EUR 436bn* (as at 30 September 2019), with more than 520 investment professionals and almost 500 client servicing specialists, serving individual, corporate and institutional clients in 69 countries.

* Assets under management and advice of EUR 589bn as at 30 September 2019.

Press contacts         

EIF
Cyrille Lachèvre
c.lachevre@ext.eib.org
+352 4379 73984
mobile: +33 6 20 42 12 08

Website: www.eib.org/press 
Press Office:
+352 4379 21000
press@eib.org

BNP Paribas
Arnaud Fraboul 
+33 7 85 16 09 20 
arnaud.fraboul@bnpparibas.com

BNP Paribas Asset Management 
Sarah Worsley 
+33 1 58 97 28 81 
sarah.worsley@bnpparibas.com

 

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