BNP Paribas mulls alternative credit ELTIF
BNP Paribas Asset Management (BNP AM) is readying to launch a European Long-Term Investment Fund (ELTIF) and is mulling the possibility of a vehicle focused on alternative credit later in the year.
David Bouchoucha, head of private debt and real assets at the investment firm, told Alternative Credit Investor that he sees opportunities with the ELTIF structure to attract retail investors via its wealth manager clients.
“We are going to participate in ELTIFs,” he said. “We have an advanced project in this area.”
Bouchoucha added that there may be scope for an ELTIF focused on alternative credit, “probably in 2024”.
Read more: ELTIF 2.0 presents “interesting opportunities” for private credit
The second iteration of the ELTIF regulations came into force on 10 January this year. They are designed to encourage private investors to put money into long-term, illiquid assets, including credit, which were typically the preserve of institutional investors.
The so-called ELTIF 2.0 is more flexible and open to a wider range of investments.
“We need to digest all of it but if we think it’s a good opportunity for our clients we will consider it,” said Bouchoucha.
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Bouchoucha said that BNP AM – which manages €35bn (£30.1bn) of private assets – is “more cautious on the lower end of retail” so any ELTIF would be focused on its wealth management clients.
“It’s very important to be very careful what you propose to retail investors,” he said. “You need to ensure that they understand about the absence of liquidity.
“Our focus in the retail space is among wealth managers. Here we think there is very strong value.”
Speaking more generally about the growth of private credit, Bouchoucha said that this is a “very exciting year” for the asset class, noting the opportunities for double-digit returns and a “good liquidity premium”.
This has resulted in a wider investor demographic taking an interest in private credit.
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“Recently we’re seen more pension funds going into this space,” Bouchoucha said.
“Now that absolute returns are coming up, even some clients like family offices and smaller institutions who were previously more focused on private equity are coming into alternative credit.
“I think the asset class is transforming into an allocation for traditional fixed income investors like insurers, into an asset class in itself. It has become part of the consideration of any allocation discussion for all investors.
“Whether they decide to move into this area or not, any institutional investor needs to make that allocation consideration.”