L’Espresso, Redbridge’s coffee-break program, welcomed Pascal Ichard, Director of Funding at Mirakl, on May 29 to celebrate the signing of the first syndicated loan for this French tech company. The discussion centered on banking relationships before, during and after initial financing for growth companies. Alongside Pascal were our moderator, Emmanuel Léchère, and Pierre Bonnet, Associate Director and Financing Consultant at Redbridge, who was part of the team that collaborated with Mirakl’s finance department on the firm’s €100 million bank syndication.

Redbridge – Hello Pascal, hello Pierre, and thank you for joining us today. We’re going to be talking about financing for tech companies, growth companies, scale-ups and unicorns. Could you start off by telling us a bit about Mirakl?

Pascal Ichard, MiraklMirakl is a software publisher specialising in e-commerce platforms. It was founded in 2011 by two entrepreneurs, Philippe Corrot and Adrien Nussenbaum. In the past we have developed a marketplace and dropship platform and more recently we have also expanded into the areas of pay-out and retail media solutions.

Do you have some figures to give us an idea of the size of the company?

Yes. Mirakl is part of the French tech ecosystem, a member of the Next40 and has had unicorn status since our Series D funding roundin 2020. In 2023 there was $8.6 billion of Gross Merchandise Value exchanged on our marketplaces – over 50% more than in 2022. We have around €160 million in average recurring revenue, which is a key indicator for companies in the software sector. We have around 450 customers from all over the world and employ about 750 people.

How is Mirakl’s finance function organised?

Mirakl’s finance function is centralized in Paris, with a few employees in Bordeaux and Boston. We currently have a team of around 40 people, including the legal and IT functions.

What is your role, Pascal?

My role within this organization is to manage cash flow and financing, as well as supervising the accounts, tax and purchasing functions.

How would you describe Mirakl’s financing strategy?

Historically, Mirakl has developed as a company with fairly limited financing needs. Our SaaS (Software as a Service) model generates recurring revenues. Scrupulous monitoring of costs and investments has helped to limit our cash burn.

Since its creation, Mirakl has tended to finance itself through equity, with significant fundraisings in 2019, 2020 and 2021. Our latest round of $555 million valued the company at $3.5 billion. This funding enabled us to invest in innovation, drive our geographic expansion and launch new products.

How does the syndicated loan fit into this strategy?

The syndicated loan is linked to the increasing maturity of the Mirakl group. Our prior fundraisings have been important in helping us to develop Mirakl, but from now on the idea is to have maximum flexibility and a more balanced pool of partners providing our financing. This means we now receive strong support from investors who have been with us almost since our creation on the one hand, and bank lenders on the other.

Credit facilities have become a popular component in the financing strategies of tech companies against a backdrop of a dearth of very large fundraising rounds since 2022. There are still many investors backing companies and projects in their early stages, but they have become much more cautious than they were in 2020-21, when a huge amount of money was raised in France.

The syndicated loan is intended to diversify your sources of finance, but why do you need it?

Mirakl’s syndicated loan, which we signed last year, is an extension of our financing strategy. It’s an additional building block that will enable us to finance potential acquisitions and support our continued growth.

The idea is to find less dilutive sources of finance with a better balance between equity and debt. By rebalancing our sources of financing, we know that we can now rely on our historical investors and the cash that is already available to us, but also on this new banking pool and this credit facility, which has already been negotiated, if we need to position ourselves for an acquisition. It means we can act quickly if we see an interesting target. The syndicated loan is therefore important from the perspective of our company’s strategy.

How did you go about setting up this inaugural syndicated loan?

The transaction took place in the first half of 2023, after we had decided to embark upon this course of action at the beginning of the year. The transaction took a few months to complete, which is in line with market practice.

What were the criteria for selecting the banks?

We selected our banking partners on the basis of their ability to support us with this financing transaction at attractive terms, but we also looked beyond this individual syndicated loan.

Our idea was to understand how the banks joining the pool could support us in other areas. For example, we looked at the geographical footprints of the banks and chose those that could support us in our geographical expansion.

We also looked at the quality of cash investment opportunities offered by these institutions in a high interest rate environment.

Finally, I mentioned that the purpose of this financing line was to fund potential acquisitions. With this in mind, we looked at the strength of the banks’ networks. We expect our banking partners to be able to suggest targets and put us in touch with them. In short, the banks need to be able to facilitate the work of our teams dedicated to external growth.

All this led us to select more global partners, to which we can give side business in the short term and that will be able to help us when we engage in major operations in the future.

Who are your banking partners?

Our pool of five banks is made up of two historic partners and three who joined the pool at the time of the deal: Natixis, HSBC, BNP Paribas, JP Morgan and Société Générale.

How much was the funding package?

We syndicated €100 million with an option to extend. It’s an inaugural loan, so the idea was to structure an initial operation that was intended to live on and that will enable Mirakl to secure further credit facilities in the future.

Why did you enlist the services of an external advisor to lead this inaugural bank financing operation?

Start-ups and scale-ups are unusual in that they grow fast. Their teams are often very busy, with lots of issues to deal with, and the teams are often in the process of being structured. Mirakl’s finance department has grown considerably in just a few years, and we didn’t necessarily have all the expertise in-house or the time available to work on the deal ourselves.

Bringing in an external advisor was an obvious choice for what was going to be an intricate operation, in which there would be a lot to negotiate. We felt it was imperative to receive support from a consultant with experience of this type of deal and who could alert us to the key points, support us during the negotiation phases and provide us with benchmarks on market clauses and conditions based on their knowledge of similar deals set up by companies with the same kind of profile as Mirakl.

How did you work with the Redbridge team?

We benefited from the support of the Redbridge teams from the outset – even before we contacted potential banking partners, in fact. The objective we set the Redbridge teams was to coordinate the operation and assist us on a day-to-day basis. We also had a real desire to train ourselves, so there was an educational aspect to the project to help us get to grips with the subject of financing.

And what did the Redbridge team deliver?

While respecting confidentiality, Redbridge helped us with the negotiations by telling us what was generally acceptable, what wasn’t and what we should focus on in our negotiations and discussions. A number of our staff were already familiar with Redbridge’s work in cash management and treasury, so it was quite natural to put them in touch with Redbridge’s finance advisory team.

The Redbridge teams were with us every week and provided regular progress updates. All the planning was in place from the outset, enabling us to keep the operation on track, with clear milestones set out. We had support at every stage of the process, from negotiations to defining the terms of the loan. This enabled us to close the deal before the summer and everyone was able to go on holiday with peace of mind.

How do you draw up your initial bank financing documentation, bearing in mind that this will become a reference point for future documentation?

Before launching the deal, within the company we needed to document our trajectory, prepare our Info Memo, and talk about the past and our ambitions for the next four to five years both in terms of our product roadmap and in terms of figures. Basically, we had to explain where we wanted Mirakl to be in the future.

As far as the documentation itself was concerned, we relied on the Redbridge teams to ensure that the documentation framework negotiated would be with us over the long term and also on the day when we needed to renegotiate. It was important to create a basic framework.

Pierre, I’m sure you have a few words to add on this subject…

Pierre Bonnet, Redbridge – In all transactions, and particularly in inaugural ones, the three facets of price, size and documentation need to be successfully negotiated simultaneously, and without one of acting to the detriment of another.

When it comes to documentation, you need to have very clear objectives from the outset – intangible things that you know you don’t want to give up, and ensure you can achieve them through good preparation for the consultation, through the info memo, and by having a very clear conviction about the quality of the credit.

How many banks were consulted?

Pierre Bonnet – We consulted quite a few banks, for several reasons. First, because Mirakl is a very good credit risk, we knew that many lenders would be interested in a deal like this. We know that banks are looking for fast-growing companies, scale-ups, French tech firms, members of the Next40. Mirakl operates in a world that’s attractive to banks, but it’s one that they don’t really know much about.

We worked together with Mirakl to find the right way to get the banks on board.

Pascal Ichard – A lot of banks were interested, even though they’re more used to working with very mature companies. Not all of them were familiar with the business models and trajectories of scale-ups. Unlike investment funds, which focus on growth and the top line, banks are more concerned about profitability issues and they are also more risk-averse.

There was a real need to explain our business model and what lies behind the figures. We emphasized the new markets that were opening up and our new products, and we had discussions with certain banks that had difficulty understanding the business models of fairly young companies. This was often because they did not have a practice dedicated to this customer segment. In the same way that Redbridge taught our teams about certain aspects of the structuring of the credit facility, we saw that we needed to teach the banks about our figures and our trajectory.

What can be done to align the banks’ views on Mirakl credit?

Pierre Bonnet – To reconcile views, it’s important to build strong convictions – to help them understand our business model, concepts related to activation, and to see how all this can be reflected in the documentation.

It’s important to understand that companies like Mirakl, whose sales volumes can grow by more than 50% in a year, are rather special animals. We need to avoid having credit documentation that constrains such companies. Banks need to understand that trajectories can change very quickly, and that scale-ups have different needs to traditional companies.

To achieve alignment, it’s vital to consult a sufficiently large number of banks to find those that will support the company’s vision for the future.

Was it difficult to build a strong relationship with your banks?

Pascal Ichard – Having some form of recurring income helps, of course. You need a fairly clear route to profitability, and it shouldn’t be too far off, so that the banks are prepared to take a bit of risk. Finally, the quality of the investment funds backing the company, the quality of the management team and the amount of funds raised, all matter enormously.

Following this inaugural round of financing, what are the plans for Mirakl’s treasury financing department from here?

We have to bring this pool to life. We are in the process of building long-term relationships with our new lenders. We are reallocating side business to certain geographical areas, and we are distributing our new business to this or that player. I also mentioned the subject of investments, which means we are open to new products and new offers from our new partners.

We’re also looking at optimization issues, such as WCR, which perhaps we haven’t taken the time to address until now. These can be interesting subjects and can lead to side business for our banks. At the same time, we are continuing to optimize our flow management.

Do you have any projects relating to the organization of cash flow and payments?

Mirakl is fairly centralised, so there will come a time when we’ll need a cash management system to streamline the management of external flows, but it’s not a priority at the moment. Things will evolve according to what’s going on, so we’ll probably have to deal with this when we make a major acquisition.

Has Mirakl broached the subject of green financing?

It’s a subject we’re considering. We work a lot on ESG issues in collaboration with Mirakl’s CSR team. For the time being, this work has mainly focused on cash investment. We are currently working on integrating ESG issues and our ESG trajectory into our financial policy.

What impact has your new business had on your banking relationships?

One of the major challenges was to convince the banks about our new retail media business, which we are investing heavily in and in which we have a great deal of confidence. We also have more and more flows in foreign currencies due to our joint venture in Japan and our new businesses in the APAC region and Brazil, and this is giving rise to foreign exchange issues. The development of our business is generating new side business opportunities that we need to work on.

How did Redbridge add value throughout the process?

They helped us in terms of keeping to the timetable, educating our teams and the banks, and their ability to put things into perspective. They also did a lot of work to ensure that the documentation was not too restrictive. This was important because we need to avoid having belts and braces imposed on us so that we can continue to grow.

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