Thursday, 19 October 2017

Crédit Mutuel Arkea: a fund of 10 million euros for fishing in France!

Over in France there comes another example of how the French fishing industry enjoys far greater sectoral support than in the UK by the financial institutions - here we see certain French banks prepared to fund regeneration of the entire marine sector, focussing largely on their ageing fleet. The UK has never enjoyed anything like that degree of support from our financial institutions - probably because the French banking system is at heart a more socialist affair - they enjpy regional and sectoral banks like Credit Agricole and Credit Maritime created specifically to fund their given economic activity. instead, we have had to rely on centrally funded bodies like the White Fish Authority which eventually became today's Seafish or EU funding - that only applied in the areas (like Cornwall once it had been devolved from the much richer per capita Devon) that enjoyed being classified as in need of regeneration through funds like Objective 1 or 5b through to Convergence and today's EMF and FLAG funding - all of which comes from the EU of course. Yes, a good percentage of that funding originated in the UK - the worry post Brexit will be - will the government see fit to support the industry with the same level of funding into the future?

Here is the article in full as translated by Google:

The Crédit Mutuel Arkéa and the Crédit maritime Bretagne-Normandie will make operational at the end of the year a fund of 10 to 12M dedicated to the activities of the sea in Brittany, and particularly to fishing. Objective, to allow the armaments to renew an aging fleet without draining their cash. The fund will be quasi-funded.
Can the future of fishing in France depend in part on banks? An old boat is a degraded profitability, but modernizing a fleet is expensive if you do not have a capital. However, with an average age of 27 years, two thirds of the 4,000 fishing boats in France are to be renewed.
(Editor: UK-The England/Wales fleet has an average age of 32 years, Northern Ireland 38, Scotland 26, Anglo-Dutch 22 years and Anglo-Spanish 33 years - Across the other main categories of vessels in the UK >12m fleet, the average ages are: twin rig whitefish trawlers (16 years); pair seiners (25); twin rig prawn trawlers (25); vivier crabbers (25); seine netters (28); beamers (32); mussel dredgers (35); netters (35); longliners (37); beam scallopers (38); single rig whitefish trawlers (38); potters (39) and single rig prawn trawlers (41).)
To answer this question, Arkéa Capital, a subsidiary of Crédit Mutuel Arkéa and Crédit maritime Bretagne-Normandie, announced the creation of a fund of 10 to 12 million euros dedicated to the activities of the sea in Brittany , and mainly fishing.
Present at the Fisheries and Seafood Meetings held in Quimper on 21 and 22 September, and in a tone that was almost alarmist, the two banks wanted to provide a new solution to fishing companies that do not have the capital: they will propose from November-December a tool whose goal is to facilitate the equity capital.
The objective is to prevent the skeleton of the fishing industry from being put in jeopardy. Brittany currently has 1,300 boats (there were 3,000 boats in the years 1990-1995), and if its fleet is not modernized, it risks losing again. However, it is a crucial region for this sector, accounting for 50% of the French fishery, 1/3 of shellfish farming and 90% of seaweed farming.
Convertible bonds 
For investors who can not fully finance their project, the new fund is designed as a leverage complement to the traditional loan that requires a minimum of 30% of the value of the vessel. Some purchases range between 2.5 and 3.5 million euros.
Marc Brière, Chairman of the Board of Arkea Capital, creator of the fund to which Crédit Mutuel Arkéa and Crédit Maritime subscribe, explains the problem in these terms:
"The capital deficit does not allow the skippers to renew their boats. However, older equipment is hampering fishing performance and the ability of enterprises to finance their modernization. It's a vicious circle. This fund will complement traditional borrowing and will be quasi-equity, in particular in the form of convertible bonds."

He adds : "The accompanied project sponsor will have to repay this participation after eight years, for example by renegotiating the amount in the form of a conventional loan over ten to fifteen years. During these eight years, fishermen will pay regular annual interest and then a reimbursement premium with the money earned from their new fleet."
For banks, the return will be in the range of 7% to 8%.  
15 to 20 projects ranging from 300,000 to 800,000 euros 
Open to the whole Breton seas sector, the future fund will be fed according to the number of files and will allow fishing companies not to drain their cash. The two banks, which together finance 95% of Breton fishing companies , plan to support between 15 and 30 projects with a value ranging from 300,000 euros to 700,000 or even 800,000 euros.
" The first arbitrations will be taken at the end of the year, adds Marc Briere. Crédit Mutuel Arkéa naturally accompanies this very active activity on the territory. It is the responsibility of the banking groups to make up for the shortfalls. If the Breton and French fishing disappears, all the downstream activity (fish trading, agro-processing, transport, etc.) will also suffer. The objective of this fund is to align the horizon of the financial resources of the projects over the lifetime of the investments."
The Region is worried about the consequences of the Brexit on the fishing industry
The initiative receives a rather positive but still cautious reception from the leaders of armaments, as long as the practical modalities are not notified. Similarly, the Region of Brittany, which is concerned about the consequences of Brexit on the fisheries sector and the risk of weakening the French sector on a European scale, plans to accompany this financial effort, as pointed out by Pierre Karleskind , Vice-President of the Brittany Region in charge of the sea.
" This fund is a private initiative of the banks, but it is open to all options including the option of accepting public underwriters under the same conditions (" pari passu "clause) as private subscribers, " notes Mars Brière, who there is nothing to prevent this pattern from being replicated in other regions.

Full story courtesy of La Tribune, France.