The fund, run by Azimut Investments, will provide debt to more than 50 Italian SMEs with a focus on improving environmental and social aspects of their operations.
A fund to support Italian SMEs, managed by a team at Azimut Investments, has reached first close, backed by a €30m cornerstone investment from the European Investment Fund (EIF).
The Azimut Diversified Corporate Credit ESG-8 SCSp Reserved Alternative Investment Fund is due to be launched in the third quarter 2023 and is targeting a maximum size of €500m by its close, scheduled for 2024.
The fund, which will be managed by a dedicated team within Azimut Investments, is classified as an Article 8 fund under the EU’s recently clarified Sustainable Finance Disclosure Regulation (SFDR), which is intended to promote sustainable investment. Funds are given the Article 8 label if they promote “environmental and/or social characteristics”, and are one notch down from Article 9, the SFDR’s most rigorous sustainability classification.
EIF is the venture capital arm of the European Investment Bank. Its commitment is backed by InvestEU, an EU vehicle for funding its policy priorities, including the European Green Deal and the digital transition. The Azimut group is listed on the Milan stock exchange, while Azimut Investments is registered in Luxembourg.
The fund will provide a portfolio of at least 50 Italian SMEs and small mid-cap companies, with medium-to-long-term debt to support investment and growth. Azimut said the fund plans to offer investors “steady returns” and that the expected gross performance is 8% a year.
Giorgio Medda, Azimut’s CEO, said the EIF’s backing provided support for “one of the first diversified credit funds from an independent asset manager focused on Italian SMEs with an ESG profile”.
In line with EIF priorities, the fund aims to back environmentally and socially beneficial aspects of businesses, such as energy efficiency improvements, circular economy strategies, gender equality, and local community involvement. At least 30% of underlying investments are intended to target climate action and environmental sustainability, while more than 40% of the fund’s investment committee will be women.
The fund’s performance fee will be linked to two environmental and social targets – a 5% average reduction of carbon and greenhouse gas emissions per year, and a maximum gender pay gap of 5%. The latter is in line with a pay transparency directive recently approved by the European Parliament.
EIF has been providing support across the EU to support SMEs in various sector. In April, Impact Investor reported on an agreement between EIF and Portugal’s Banco BPI, under which EIF will provide guarantees for up to €155m in loans for Portuguese SMEs with a focus on sustainability, the cultural and creative sectors, and innovation and digitalisation, as well as a separate investment by EIF in Portugal’s blue economy.