French green transition law opens up private credit to retail investors

A new French law intended to speed up the country’s carbon transition and strengthen its industrial competitiveness is opening up private markets to retail investors, according to Moody’s Ratings.

In a new report, Moody’s said that as private markets have grown in both the US and Europe, regulatory easing and new fund structures are expanding access for retail investors to private credit.

Read more: Retail investors will drive 50pc of private market flows by 2027

The law, which came into effect in France in October last year, aims to redirect €5bn (£4.3bn) annually from ‘main street’ investor savings to help fund the country’s decarbonisation efforts and industrial revival, particularly through life insurance and retirement plans.

“Asset managers are keen to pursue growth in alternative asset classes, including private credit, where fees are higher than in more traditional publicly-traded asset classes,” said Guillaume Lucien-Baugas, vice president and analyst at Moody’s.

Read more: Pension firms pledge to invest 10pc in private markets by 2030

“Nonetheless, although the law will help close the funding gap for green investing, liquidity mismatches between long-term assets and investor withdrawals create liquidity risks for retail investors.”

It comes as 17 UK pension firms have recently pledged to invest at least 10 per cent of their default pension funds into private markets by 2030 via the ‘Mansion House Accord’.

Read more: Seed investment activity shifts towards private credit strategies