CF NEWS: Sienna IM sets up defense fund
GBL’s subsidiary with €40 billion under management has created the Article 8 Sienna Héphaïstos vehicle with initial support from La France Mutualiste, which is contributing €30 million. GP hopes to secure between €500 million and €1 billion to support the European mid-caps and SMEs of the BITD through debt, with the potential for a version dedicated to individual investors.
Published on March 14, 2025, 10:19 a.m., updated on March 14, 2025, 6:12 p.m. | 782 words
Some will not have waited for the government’s call to action. While Emmanuel Macron and Eric Lombard are calling for an acceleration of the war effort, notably through the financing of defense by private actors, Sienna IM (investment management) is formalizing the creation of a private debt strategy
private debt strategy dedicated to this sector. Called Sienna Hephaestus, in reference to the Greek god of the forge, the vehicle structured in the form of a Luxembourg RAIF and the result of discussions initiated in 2023 during the military programming law aims to raise €500 to €1 billion from French and European LPs. The “France Mutualiste” mutual fund, an individual savings fund of the Malakoff Humanis group (which sold off its subsidiary for asset management to Sienna in 2023) will prime the pump with, according to our information, a budget of €30 million. The fund also aims to aggregate fresh money from family offices, public investors and institutional investors … a population that would have been almost impossible to attract a few years ago, due to its investment policy. “A large number of institutional investors have revised their exclusion policy or are in the process of doing so,” says Laurent de Bo Fonds, managing director of private debt. And for good reason: exclusions now mainly concern “prohibited weapons” (which the fund is not intended to address), whereas previously their contours were much more vague and complex for GPs to interpret. Defense industry manufacturers may also appear as a minority interest among the list of LPs of Sienna Héphaïstos, “a sign of seriousness” of the vehicle’s thesis.
Tickets from €5 to €30 million
The major principals will have an even more important role to play, as this will not be limited to the possibility of investing in the fund. They will also be able to contribute to the sourcing of files and the construction of packages of collateral.
Sienna Héphaïstos will be involved in senior secured debt, via tickets of €5 to €30 million, and will be able to provide collateral on real assets (stocks, etc.). “This is a way of guaranteeing to manufacturers the security of their supply and the sustainability of their production projects, which sometimes rely on a single niche supplier, bearing in mind that the certification of new partners can sometimes take up to two years,” explains Philippe Roca, director of corporate debt funds at Sienna IM. Sienna Héphaïstos should have thirty to sixty lines depending on its final size. Some 60% of them should be mid-sized companies and 40% French, Italian or German SMEs, acting as subcontractors for the large industrial groups of the BITD. The investments, made by a team of around ten employees based in France and Italy, “will be aimed both at supporting the ramp-up of BITD companies – via the financing of their working capital requirements and capex – and the consolidation of this fragmented sector,” continues the manager.
A retail investment fund in the pipeline
Classified as Article 8 under the SFDR regulation, the fund will not support activities prohibited by international treaties signed by France and Italy. It may apply ESG margin ratchets relating to issuers’ actions in the area of sustainable development.
“The companies in this sector do not present any incompatibility with a precise and detailed ESG analysis,” says Laurent Dubois, praising the sector’s pursuit of operational efficiency and its particularly closely monitored governance. This vehicle created by Sienna is the first dedicated to this private debt sector, while several investors – such as Weinberg CP (with Eiréné) or Bpi- france (with Definvest) have positioned themselves in the equity sector, as have asset managers (including WisdomTree, which has just launched an ETF dedicated to listed European defense stocks). And GBL’s subsidiary, with €40 billion in assets under management, fully intends to allow as many people as possible to benefit from this first non-dilutive strategy. “We have been asked to create a consumer version of this strategy that is accessible through life insurance,” Laurent Dubois reveals. A collective effort that some consider essential, with several BITD executives estimating the industry’s private funding needs at some… €100 billion.
Find all the articles on: Laurent Dubois , LA FRANCE MUTUALISTE , Philippe Roca , SIENNA INVESTMENT MANAGERS (SIENNA IM)