Specialised financing vehicle

Ordinance No. 2017-1432 of 4 October 2017, which modernised the legal framework for asset management and debt financing, created the organisme de financement spécialisé. The French Monetary and Financial Code places it with securitisation vehicles in the category of financing vehicles (organismes de financement). It takes the form of a fonds de financement spécialisé, a co-ownership without legal personality, or of a société de financement spécialisé incorporated as a société anonyme or a société par actions simplifiée. An authorised portfolio management company manages it. A management company from another Member State, authorised under Directive 2011/61/EU on alternative investment fund managers, is permitted to manage it. The OFS invests in financial instruments, receivables or sub-participations. It funds itself by issuing units, shares or debt securities, or by borrowing. It grants loans to companies under two frameworks. The first is Regulation (EU) 2015/760 when it has obtained the ELTIF designation. A Conseil d’État decree sets the second, available when its unit redemptions and its leverage are limited. The loans then go to non-financial companies and their maturity remains shorter than the vehicle’s remaining life. The OFS holds shares received through the conversion, exchange or redemption of debt securities, which allows it to remain a shareholder of the borrower after a restructuring. For the borrower, the remaining life of the OFS sets the maximum maturity of the loan it offers.

An OFS launched for ten years offers, three years after its creation, a €50m senior loan to a medical equipment distributor. The fund’s remaining life is seven years: the loan is set at six years, repayable at maturity (bullet). The agreement provides that, in the event of a restructuring, part of the debt converts into shares that the fund retains.

• The form of the OFS, fund or company, and the management company named in its regulations or articles of association
• The fund’s remaining life, which caps the loan maturity
• The lending framework used: ELTIF or Conseil d’État decree
• The clauses converting the debt into equity