* To invest an initial 250 mln euros
* Plans further "significant commitments"
* To target companies worth 200 mln euros-1 bln euros
(Adds background, detail, quote)
By Simon Jessop
LONDON, July 17 British insurer Legal & General
(L&G) plans to start lending direct to businesses
across Europe, offering a much-needed boost to small and
mid-sized companies starved of credit from the banking system.
It joins peers such as French-listed AXA and
Germany's Allianz in filling the gap left by
cash-strapped banks, creating a so-called shadow banking system
to boost income during a period of sustained low interest rates.
L&G said on Thursday that it had subscribed for a 40 percent
equity stake in Pemberton, an alternatve asset management firm
that is launching a new direct lending platform to provide loans
and private placements to mid-market companies.
The service will focus on companies with turnover of between
100 million euros ($135 million) and 1 billion euros. L&G, which
invests 463 billion pounds worldwide, said it would invest an
initial 250 million euros with the intention of making further
"The UK and Europe have been too dependent on bank
financing, and this impacts particularly on businesses wishing
to invest and expand," Paul Stanworth, managing director of
Legal & General Capital, said in a statement.
NEW ASSET CLASS
"Creating a new channel to deploy longer-dated institutional
money in the mid-market sector will help drive economic recovery
at a time when bank balance sheets are constrained, as well as
creating a further asset class for direct investments by
insurance companies and other institutions."
Loans will be made using Pemberton's on-the-ground presence
in various European markets and its network of regional bank
relationships, the statement said.
"Through our platform, we will enable the mid-market to
access funds from established institutional investors at a time
when the number of loans available from banks is in decline,"
said Symon Drake-Brockman, managing partner at Pemberton.
AXA and other French businesses, including fund managers
such as Amundi, have taken advantage of government help to boost
the fledgeling industry.
The move to direct lending in companies by 178-year-old L&G
follows sharp growth in its spending on building infrastructure
and housing in Britain, another much-hyped avenue for higher
returns as governments struggle to fund such investments.
L&G's current investment in infrastructure and housing
stands at 4 billion pounds, it said.
($1 = 0.7390 Euros)
(Editing by David Goodman)