• The first of its kind in Europe, Eiffel Impact Direct Lending is a unitranche private debt fund that systematically incorporates Impact Covenants® dedicated to SMEs ;
• The fund will use the proprietary Territorial Impact Score methodology developed by Eiffel Investment Group to measure the local footprint of the companies financed ;
• With a target of €400m, the Eiffel Impact Direct Lending program (1) has just finalized its first closing at €200m with leading institutional investors, including the European Investment Fund.
Addressing the non-banking financing and impact needs of SMEs
The private debt market has steadily grown in recent years. However, most of capital raised goes to the large companies, leaving the SME funding gap significantly unsolved.
Likewise, impact investing has increased significantly, reaching around $3,000 billion in sustainable funds in 2023 (2), but it still mainly supports large companies, largely excluding SMEs who need these resources to accelerate their energy transition and contribute to decarbonizing the economy.
To address this dual challenge, Eiffel Investment Group is launching the Eiffel Impact Direct Lending fund, aiming to provide unitranche financing to c. 25 French and European SMEs with an average target EBITDA of between €5 and €15m. Facilities are expected to range from €10 to €30m.
Making an impact on the SMEs’ transition process in Europe
Classified as “Article 9” under the SFDR regulation and the LuxFLAG ESG Applicant label, the Eiffel Impact Direct Lending fund incorporates an innovative approach to impact, invented by Eiffel Investment Group: Impact Covenants®. Along with financial covenants, Impact Covenants® will be agreed with each financed company’s management, to target predefined, measurable improvements in their ESG strategy (e.g job creation, carbon footprint reduction, education and training, inclusion, etc.). On a yearly basis during the loan life, Impact Covenants® will be tested for each funded company and the interest rate adjusted downwards (if achieved) or upwards (if missed).
(1) The program comprises the Eiffel Impact Direct Lending fund and a fund dedicated to a leading institutional investor.
(2) Source: Morningstar Global Sustainable Fund Flows
A first transaction emblematic of the fund’s strategy
An initial transaction has been signed with SATEP SAS, a key player in the installation and maintenance of HVAC (Heating-Ventilation-Cooling) systems and other energy autonomy equipment (solar, charging stations, storage, home automation). Founded by two entrepreneurs, Louis-Clair François-Poncet and Lucien Roquette, SATEP aims to meet the need for decarbonization in the building sector by acting as an energy advisor to individuals in their renovation projects.
The unitranche financing provided by Eiffel Impact Direct Lending will facilitate the execution of several external growth operations, and features 3 Impact Covenants® covering decarbonization, training and value-sharing objectives for the group’s employees.
First fund to systematically use the Territorial Impact Score methodology
Given the profile of the companies financed (SMEs), the fund will also incorporate the Impact Territorial Score (TIS), a methodology developed by Eiffel Investment Group in partnership with Guillaume Vuillemey, a professor at HEC. We extended and automated the TIS by working with InEurope, a specialist in measuring territorial impact and ESG data.
This score measures the company’s impact on its clients, suppliers, employees and other relevant stakeholder, by comparing their footprint with public indicators that reflect the company’s situation in relation to the statistical data (e.g. unemployment rate, isolation rate, share of graduates, medical coverage, etc.).
The main idea of the methodology is that a company has more influence on its territory if it provides services and employment in poorer areas. For instance, a healthcare company will make more of a difference if it operates in areas that lack medical facilities.
This new methodology will allow the fund to raise awareness among portfolio companies and accurately track the evolution of their extra-financial impact on local communities.
A fund backed by a leader in impact debt
Eiffel Impact Direct Lending draws on Eiffel Investment Group’s extensive expertise and track-record in impact private debt. The private debt platform, led by Antoine Maspétiol, employs almost 20 professionals managing over €3.2 bn of AUM (including uncalled commitments).
The team is a leader in Europe for its application of Impact Covenants® (having established more than 200 so far), and has a strong experience in SME financing, with over €1bn invested in corporate private debt in 2023, helping more than 40 companies.
Initial closing at €200m with institutional investors, including the European Investment Fund
The fund’s unique thesis (impact unitranche for SMEs), combined with the team’s solid track-record, enabled it to bring together a panel of leading institutional investors, including the European Investment Fund, for this first closing.
The Eiffel Impact Direct Lending Program has just finalized its first closing at €200m and is targeting a final closing of €400m in 2025.
Eiffel Impact Direct Lending S.L.P is an Article 9 fund under SFDR regulations reserved for professional clients.