Equitim, an independent consulting and brokerage firm based in Paris, has launched Grand Large 2015, a ten-year medium term note linked to the CAC Large 60 Equal Weight ER index. The note, which is issued via Natixis, has an autocall feature and is listed on the Luxembourg Stock Exchange. The product is Equitim’s third linked to the CAC Large 60 Equal Weight ER index in recent months: earlier this year the firm launched Hexagone Rendement and Solution Rendement for which Natixis also acted as the issuing company.
Equitim launches around 100 structured products a year, with a size of between €1m and €5m each, according to Damien Leclair (pictured), co-founder and CEO. “We design customised structured products for independent financial advisers (IFAs), private banks and asset managers,” he said.
The majority of Equitim’s products are linked to equities, a reflection of the French market as a whole (SRP data shows 321 out of 336 French structured products with strike dates in 2015 are linked to equities). Leclair says this is because most French investors subscribe to financial products which are wrapped as life insurance products. “It’s much easier within the life insurance wrapper to issue products linked to equities than, for example, credit or rates,” he said.
For credit-linked products France already has euro funds – products which are offered in all life insurance packages – for which the minimum return is known in advance, said Leclair. “These are easy funds to invest in,” he said. “Investors can access the fund and leave the fund whenever they want.” Euro funds are linked to credit and bonds and in life insurance you can buy bonds directly, said Leclair. “Credit-linked notes, as in structured products, do not really agree with life insurance companies,” he said. “As the rates are so low, it is impossible to structure an interesting product within a life insurance contract. That’s why equities have such a large market share in structured products.”
Grand Large 2015, like most of Equitim’s products, features the autocall payoff, the dominant payoff in France by some distance. “If you do the same type of product in reverse convertible your yield is really below that of an autocallable,” said Leclair. The second reason for the payoff's popularity is to create some sort of animation with the clients, said Leclair. “Every time a product is redeemed early the financial adviser can call the client and explain all that’s good about this product because it’s over and has returned the yield which was forecast at the start of the investment.”
SRP’s French database registers 56 structured products provided by Equitim. The products, which were launched in collaboration with a large number of issuers, including BNP Paribas, Commerzbank, Credit Agricole, ING, Natixis, Rabobank and Societe Generale, date back to May 2009.
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