The Belgium-based fund is investing in a dozen companies that aim to achieve systemic changes in environment, skilling & education, and health sectors.
Luxembourg-registered fund manager Impact Expansion has just announced a second closing above €100m for its Impact Expansion Fund I, which aims to support profitable SMEs looking to increase their impact in environment, education, skills and health.
The fund, sponsored by Belgian-founded impact specialist KOIS, aims to support profitable SMEs looking for €5m to €20m of capital to accelerate their development and increase their impact.
The fund has an Article 9 classification under the EU’s Sustainable Finance Disclosure Regulation (SFDR). It has also received the support of the European Investment Fund (EIF) and Belgian sovereign wealth fund SFPI, as well as other institutional investors, family offices and entrepreneurs.
The final closing is planned for Q1 2024 with a target of €120m and a hard cap of €150m.
Impact Expansion raised €50m in a first closing in November 2022, including a ticket from the European Investment Fund (EIF) of €30m from its InvestEu mandate, which focuses on impact growth opportunities.
The fund will invest either through majority or minority stakes, which its backers said differentiates it from other impact funds that generally only take minority stakes.
The fund said it is targeting private equity type returns of 2.5x and +20% IRR in line with the performances achieved by the fund’s partners who have invested €118m in 14 impactful companies, delivering a total return of 2.8x and 21% IRR as of December 31, 2022.
Two of the four partners, François de Borchgrave and Charles-Antoine Janssen, claim over 10 years of experience in impact investing as founders and partners of KOIS, having invested in Gojob in France and Belgian Eco Energy. Before joining the team in 2021, the other two partners, Erick Rinner and Jérôme Fournier Le Ray, worked at Milestone, a PE investor supporting SMEs in their development.
“Francois and Charles-Antoine realised that the market has a lot of capital available for venture-type impact projects, but then when companies were reaching a certain level of development, there was a lack of growth capital to allow them to really scale their impact,” Elvire Perrin, investor relations and impact manager at Impact Expansion, told Impact Investor.
The projects being financed aim to bring solutions to social and environmental needs the team has identified.
This will include improving access to and quality of training/education, and employability and access to jobs for vulnerable and disadvantaged groups; improving access, quality and affordability of healthcare in Europe thanks to new business models or technology; and fighting the climate crisis and reduce environmental degradation, by investing in themes around recycling and circular economy, renewable energies and energy efficiency & storage, and sustainable agriculture.
The fund, which invests in Benelux, France and Western Europe, aims to take participations in 12 companies. It has already made three investments committing up to €30m of the fund, representing about a quarter of the final portfolio it is looking to build. These three companies, Potential Project, SomniPlanet and MonKitSolaire, provide solutions to burnout in large organisations, sleep apnea treatment and renewable energy accessibility respectively.
“Despite the current challenging fundraising environment, we are confident we will reach at least our objective of €120m,” said de Borchgrave.
