New tool to finance Catalan SMEs: Avalis allies with Kenta Capital and launches a debt fund

BarcelonaAvalis, the public-private company promoted by the Generalitat that offers guarantees to SMEs and self-employed workers, is joining forces with the banking services firm Kenta Capital and launching a debt fund to finance small and medium-sized Catalan enterprises (SMEs). The instrument, presented this Wednesday in Barcelona, is launched with an initial volume of 50 million euros and offers financing conditions that are until now unusual for SMEs: unlike a common loan, companies will have access to a structure known as "bullet".

Under this format, the loan amount must be repaid in a single installment at maturity, and interest is the only payment that must be made periodically.

The idea behind this new fund is to offer loans of up to four million euros per operation under "competitive" conditions and with maturity terms of between five and seven years. Thus, it is estimated that around fifteen operations will be closed through this vehicle.

The financing will come from two sources: on the one hand, from institutional investors and wealth management companies of large fortunes (the so-called "family offices), most of them Catalan. On the other hand, the fund has the financial support of Kutxabank, Unicaja, and Laboral Kutxa. Avalis, for its part, will guarantee 75% of each operation, while also having the support of Compañía Española de Reafianzamiento (CERSA), dependent on the Ministry of Industry.

"With this fund, we are bringing SMEs closer to financing tools complementary to banking," stated the co-founder of Kenta Capital, Borja Bertrán. "We offer more added value to Catalan SMEs with a differential and innovative product that they do not have," added the CEO of Avalis, Anna Álvarez, who highlighted the advantages that financing formulas like this can bring to small businesses. "In this way, we give time for investments to be profitable; we do not stress the SME, we offer it time and serenity," she asserted.

Although the cost of financing is higher than a typical bank loan, Avalis and Kenta Capital maintain that the new instrument offers much more favorable conditions than any other type of alternative debt fund.

Potential beneficiaries

The type of company the fund is aimed at is a Catalan SME with a "stable" financial situation, a "consolidated" position, and that is in the process of growth, both organic and through mergers and acquisitions.

The vehicle is not limited to a specific type of business, but rather is born with the intention of having a multisectoral focus. Beyond excluding sectors such as defense, Avalis and Kenta Capital are open to all types of activities with growth potential, from industry to services, also including the agri-food sector. According to the mapping carried out by the fund's partners, it is estimated that more than a thousand Catalan SMEs could be potential beneficiaries.

For now, the fund maintains a rather "proactive" attitude to find companies interested in using these financial resources. The long-term objective, however, is to become known in order to adopt a more reactive position - that SMEs call them - and to consider expanding the size of the fund.