Bpifrance wood fund: much more than finance for expansion of the sector!

Over the last ten years, Bpifrance has invested in the timber & wood sector through its wood fund, an investment fund dedicated to timber conversion and furniture and fitting-out companies. With €50m issued to date, its tools have already assisted sixteen industrial development, business transmission, or external acquisition projects.

Bpifrance launched its first fund 10 years ago followed by a second 5 years ago. Why such a commitment from Bpifrance in the timber & wood sector?

France has access to a strategic resource with worldwide demand: timber. And French industry needs massive investment to be able to convert this and meet the best standards sought by the market in a context of international competition. That’s why Bpifrance has a great attachment to timber and wood. Our ambition is to commit ourselves alongside business to stimulate the French timber industry and help develop its know-how and employment in our regions. A first “wood fund” was created at the end of 2009. This fund, essentially dedicated to the industrial development of first stage conversion, runs until the end of 2021. A second generation fund followed in 2014, directed more at furniture and fitting-out companies but maintaining a foothold in first and second stage timber conversion. It also targets business transmission projects, an important issue for SMBs in the sector. The industry works in long cycles and that’s why this second fund runs until the end of 2028.
10 years ago, not many investors took an interest in the timber conversion industry. There are a lot more today, though.

How do these wood funds work?

Each wood fund operates an investment period during which it funds companies (2010–2013 for fund 1 and 2014–2020 for fund 2), followed by a management period in which we assist in the development of the companies we invested in (up to the end of 2021 for fund 1 and the end of 2028 for fund 2). We have received roughly 500 funding applications over the ten years (that’s an average of 50 a year), and we have narrowed those down to 16 investments. To be shortlisted, an application must present a development plan or a structuring transmission plan, which our team will then analyse with a view to passing it on to the investment committee for agreement. Then there’s a limited audit period and negotiation of documentation to complete the investment.
Depending on the maturity of the application file, the average time taken is 3 to 6 months. And since we intervene at the top end of the balance sheet, we integrate governance in a role of minority shareholder so we can support the director when making strategic choices, or for all questions in which our assistance is useful.

What type of projects are the wood funds intended for?

The fund’s vocation is to build splendid company histories with the directors, in which the key is the development of qualified jobs and real impact on the attractiveness of regions.
The first fund has already helped finance six new first-stage conversion plants. These are mostly softwood sawmills, installed all over France—the Landes, Savoie, Morbihan, Puy de Dôme regions—but we’ve also used Fund 1 to invest in panels and boards, pallets, wood energy. The fund has enabled more than €150m of productive investment. With Fund 2, we have invested in an industrial joinery firm, a cupboard door manufacturer, a laminated wood producer, a furniture maker, fitting-out firms, and others. And we have already underpinned 6 external expansions with this second fund.

How do you differ from banks and more traditional investors?

At the bottom end of the balance sheet, Bpifrance has carried out some short-term funding along with the banks. At the top end of the balance sheet, we jointly invest with more traditional investors. Our actions are calculated to drag the market toward us, to lever private stakeholders. Our contribution goes much further than a pure financial input: we also provide advice and coaching. The director is free to approach us at any time to talk about their business and its strategic choices. And since we are specialized in timber and wood in its broadest sense, we, unlike a general investor, have a more focused business vision that we can share with the director.

​

How do you see the market in relation to the evolution of company directors?

The goalposts are moving, that’s for sure! For several years, with the renewal of generations in family-run businesses, we have found ourselves face to face with young, resilient directors who have no intention of resting on their laurels. Sawmills must introduce more and more automation and digital solutions. The new directors fully understand the need to invest massively to secure a long-term future for their businesses. In softwoods especially, French stakeholders have taken an incredible leap by investing heavily in their industrial equipment. They are busy making up lost ground. And when they invest, it’s not done haphazardly but in relation to the specific profile of the French forest, which is far from heterogeneous.
We can also observe first stage conversion working more and more alongside timber construction, a consequence of massive investment in the industry. This augurs well for the timber markets, which will be expanding within the construction field in years to come (France Bois 2024, etc.).

What prospects for the wood fund?

We are already looking hard at a third incarnation. The idea is to follow up the actions undertaken by adding building blocks to serve this sector better. We are also multiplying actions in order to be a growth vehicle for the French sector. At funding level, working alongside the traditional “Participative Wood Loan” (€40k to €300k funding over 7 years), we have launched a new, dedicated tool: the “Timber & Wood Sector Loan” (€300k–€1m funding over 3–10 years). In the scope of the Timber & Wood sector Strategic Committee, we have also recently launched the “Timber & Wood SMB and intermediates Accelerator” in partnership with Codifab, France Bois Forêt, and the Ministry of Agriculture: a 24-month, bespoke booster programme that has just begun an initial promotion of 22 companies. Bpifrance wants to become the bank of the climate, already being the bank of wood.

Find out more