Interview of Romain Chaufour with CFNEWS
Transcript of the interview:
Bogdan Kowal: Hello and thank you for joining us to talk about factoring with Romain Chaufour, who is Head of Development at Fibus, formerly Chateaudun Crédit.
Romain Chaufour: Hello Bogdan.
B.K.: Hello Romain, how are you?
R.C.: Very well, and you?
B.K.: So, what is the link between factoring and M&A funds?
R.C.: Growth.
B.K.: Meaning?
R.C.: Factoring is a way to finance growth, whether external or organic. And today, for a private equity fund, it is the most efficient way to turn a portfolio company’s trade receivables into cash. At Fibus, we have been supporting investment funds and LBO companies for 15 years to structure and negotiate factoring facilities.
B.K.: But what is the benefit of factoring for fund portfolio companies?
R.C.: In France today, intercompany payment terms go up to 60 days or even more, and factoring is a way to finance these receivables. It is the largest source of short-term financing for a company. It is also a very stable form of financing, more reliable than other credit lines you may find in LBO structures, such as RCFs. Most of our work today is combined with RCFs, as a complementary financing tool.
B.K.: That sounds good, but concretely, what do you actually do? I always have the impression that factoring is a last resort when everything else has failed.
R.C.: The goal is to look at factoring as early as possible. At Fibus, we have structured our offering to be involved at every stage of an acquisition process – before closing – with the main objective of estimating financing potential and factoring costs. Implementation then happens post-closing, either very quickly after closing or…
B.K.: But couldn’t internal teams do this themselves?
R.C.: They can, of course. But this is a structuring type of financing, so the goal is to support and advise the finance teams. With 15 years of experience and 52 experts at Fibus, we bring project management capabilities and handle key steps: bank negotiations, implementation, IT-related topics, and so on.
B.K.: Can you give me a concrete example?
R.C.: This year, we worked with a company owned by a private equity fund under an LBO. The group had been built through multiple acquisitions and already had around ten entities. We set up a €50 million non-recourse factoring facility with two objectives: first, to provide additional cash reserves – the company was already cash-rich – but we enabled extra financing to accelerate its M&A strategy. Then we integrated newly acquired entities, increasing the facility from €50 million to €80 million.
B.K.: Couldn’t they have done it themselves? Are you stronger in this area?
R.C.: Some CFOs are very experienced in factoring and could negotiate good facilities. But we take over part of the project. We bring negotiation power – we represent nearly 10% of the factoring market. In 2022, we arranged €41 billion of financing. But above all, we bring project management expertise. Factoring is not a simple “blank cheque”: there are multiple steps between negotiation, bank approval, and the moment when the first funding is actually drawn. That is where our value lies.
B.K.: Is factoring expensive?
R.C.: What does “expensive” mean? Today, factoring is one of the cheapest sources of financing available. A factoring facility is around 5–6%.
B.K.: So it is an additional line for the fund?
R.C.: Yes, but it is also a deconsolidating facility, meaning it does not impact the company’s leverage.
B.K.: That’s important!
R.C.: Very important. It improves financial statements and helps companies comply with debt covenants.
B.K.: Do people actually know that?
R.C.: Yes, and that is one of the reasons for factoring’s success. It is an additional financing line that secures acquisition debt repayment and supports growth, without affecting leverage ratios.
B.K.: But Romain, you’re still not answering my question – is factoring expensive?
R.C.: No, it is not expensive. It is one of the cheapest financing solutions. For example, we recently structured a €15 million factoring facility for an LBO company refinancing acquisition debt. The acquisition debt was at 11%, while the factoring line we secured was below 6%.
B.K.: Romain, thank you very much for these insights!
R.C.: You’re welcome, thank you Bogdan!
Source: CFNEWS /TV emission