Sienna Investment Managers (Sienna IM) has launched a European private credit strategy for defence-related companies, amid growing demand for investment into the sector due to mounting geopolitical tensions.
The new strategy is called Sienna Hephaistos, in reference to Hephaestus, the Greek god of blacksmiths.
The Paris-based asset manager said that it will support European SMEs and mid-caps in the defence sector, aiming to raise between €500m (£412m) and €1bn from investors mainly in Europe.
Read more: Sienna IM saw private credit inflows hit €400m last year
The financing will be tailored to the specific needs of defence firms, Sienna IM said, such as modernising their production lines and accelerating their production, as well as funding growth projects, with a strong focus on France, Italy, and Germany.
The strategy is classified as Article 8 under the SFDR regulation and will include incentives for borrowers linked to pre-defined sustainable KPIs.
Sienna IM’s investment management team is actively working on identifying projects to enable the rapid deployment of this strategy.
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“In anticipation of important regulatory or legislative decisions, it is crucial to unite both public and private financial actors for the benefit of security and peace in Europe,” said Laurent Dubois, managing director – private credit at Sienna IM.
“Sienna Hephaistos serves as an impactful bridge between, on the one hand, investors conscious of the acute challenges facing Europe and, on the other, industrial SMEs and mid-caps in the defence sector that are experiencing a sustainable increase in their order books. Our team is already hard at work with our valued investors’ support to promote and protect Europe’s sovereignty.”
The escalating Ukraine crisis has fuelled the need for more defence spending in Europe, where the sector has been underfunded for decades. Amid a shortage of bank funding, private credit has been touted as a viable alternative by industry experts.
