Impact Expansion has raised €150m for Impact Expansion Fund I and announced the fund’s first investment in Belgium into sustainable energy solutions provider BeliVert.
Impact Expansion, an impact fund manager with offices in Brussels and Paris, has announced the final close of its Impact Expansion Fund I, exceeding its fundraising target of €120m to reach a hard cap of just above €150m.
The fund has received commitments from a range of institutional investors, including the European Investment Fund (EIF), Swen Capital Partners, BNP Paribas Fortis Private Equity, Belgian insurer Ethias, Belgian HR and insurance company Securex and Belgium’s sovereign wealth fund SFPIM. It has also received investments from several European family offices, including VP Capital.
The aim of the fund is to provide growth capital to profitable SMEs in Western Europe, mainly in the Benelux region and France, that offer solutions to major gaps across the three themes of healthcare, upskilling and inclusion, and climate and nature.
Speaking to Impact Investor, Elvire Perrin, investor relations and impact manager for Impact Expansion, explained the decision to focus on growth companies in Western Europe.
“When we started this endeavour, we saw there were many early-stage venture funds but very little capital for the stage after that to help companies that had proven their raison d’être to scale their businesses and their impact,” she said. “We also took the view that it was important to invest into companies that were close to where our teams were located and where the partners understood the market and could demonstrate a strong track record of investing.”
The fund, which aims to deliver a gross internal rate of return (IRR) of 20% or more, will invest between €5m and €30m into each of its holdings, taking either a majority or a minority stake. The fund has already made its first four investments into Potential Project, SomniPlanet, MonKitSolaire and most recently, into BeliVert.
Impact Expansion and the fund are headed by four partners including François de Borchgrave and Charles-Antoine Janssen, who are both founding partners of Belgian impact consultancy and private equity impact investing platform KOIS, which is a sponsor of Impact Expansion. The other two partners, Erick Rinner and Jérôme Fournier Le Ray, have worked together for nearly 20 years at European Acquisition Capital and more recently at Milestone, a traditional private equity investor, which was founded by Rinner in 2008.
Impact Investor reported on the fund’s second closing last July.
Impact across SDGs 3, 4, 7, 8, 10 and 13
The fund will make between 12 and 15 investments into companies responding to challenges within SDG 3 (Good health and well-being), SDG 4 (Quality education), SDG 7 (Affordable and clean energy), SDG 8 (Decent work and economic growth), SDG 10 (Reduced inequalities) and SDG 13 (Climate action).
Commenting on the existing investments into Danish firm Potential Project, which works with leaders of large corporations to create more human-focused workplace environments and French firm SomniPlanet, which provides treatment for people suffering from sleep apnoea, Perrin said: “Potential Project provides training and consultancy for management to improve their work environment, reduce stress and ultimately, decrease incidence of burnout. There is a strong focus on mindfulness, and their approach is based on scientific research published by the Harvard Business Review.”
“SomniPlanet is also very interesting as they offer a solution that helps patients with sleep apnea to stick with their treatment plans using a support network of doctors, coaches and psychologists who monitor and check-in with patients regularly,” she added.
The other investments are in MonKitSolaire, a French company which has developed solar energy kits that can be easily installed and operated by homeowners, and Belgian company BeliVert, which supplies sustainable energy solutions, including solar panels, battery storage, smart control systems and charging stations.
“MonkitSolaire distributes do-it-yourself solar panel kits providing a solution that is three times cheaper than professionally installed solar panels. Their kits come pre-assembled and clients can follow easy-to-use online tutorials to install panels on their roofs, balconies or in their gardens, improving access to renewable energy for a wider population,” explained Perrin.
“BeliVert, which works with professional installers, offers a one-stop-shop solution for homeowners and commercial clients that includes solar energy, battery storage, charging and smart controls. They also leverage their offer to help clients go further in improving their energy efficiency with additional measures.”
The fund uses COMPASS methodology, developed by the Global Impact Investing Network, to compare, assess and measure the impact of its investments and its team will negotiate impact KPIs with the management teams of each company prior to investment. These are validated by an independent impact committee and monitored throughout the investment period until exit, with 50% of the investment team’s carried interest linked to the achievement of the impact KPIs.
Article 9 – more clarity needed
The fund has the EU’s Sustainable Finance Disclosure Regulation (SFDR) Article 9 status but not all Article 9 funds are impact funds and Impact Expansion are among the impact investors who would like to see greater transparency and nuance added to the classification.
“There is increasing pressure from the impact fund community to create an impact fund category within the Article 9 classification. For the time-being the regulation doesn’t take into account the specificities of impact funds. We would like to see that change to offer greater transparency to investors and the broader market.”
