The fund will provide unitranche funding to French and European SMEs, while encouraging the companies they finance to take account of environmental and social concerns.
Eiffel Investment Group, a Parisian impact and sustainability-focused asset manager, has launched a European impact debt fund which will focus on small and medium-sized enterprises (SMEs).
The fund, Eiffel Impact Direct Lending, will provide unitranche funding to French and European SMEs, while encouraging the companies they finance to take account of environmental and social concerns.
The fund is classified as Article 9 under SFDR regulation and is backed by both the European Investment Fund (EIF) and the InvestEU program. Eiffel confirmed that the fund has a target of €400m, and recently finalised its first closing at €200m.
The firm currently finances companies through private debt, private equity, energy transition infrastructure as well as listed equities and credit.
Within private debt, the firm has two main strategies, senior debt and unitranche, with assets under management totalling €3.5bn.
Speaking to Impact Investor, Antoine Maspétiol, head of private debt at Eiffel, said that as banks currently favour private debt transactions with larger companies, this has created an opportunity for unitranche investing into SMEs, which he added are often overlooked.
“We have found an opportunity to concentrate on transactions with SMEs, which can be overlooked by banks who do not fully trust the [unitranche] market due to the limited number of players within this space,” Maspétiol said.
An initial transaction has been signed with French firm SATEP, which aims to decarbonise the building sector by acting as an energy advisor to people in their renovation projects.
Territorial impact
Eiffel said that it incorporates a methodology designed to measure a company’s ‘territorial impact’ and ESG data when choosing where it will provide its financing.
The guiding principle of the methodology means a company has a greater territorial impact if it serves users and creates jobs in more disadvantaged areas. A healthcare company will have a greater impact if it is more established in areas where there are no medical centres, for example.
Another core element of the fund is its use of impact covenants, or legally enforceable promises, as a tool for ensuring the greatest impact of their investments, Maspétiol told Impact Investor.
Institutional backing
Marjut Falkstedt, chief executive of the EIF said: “The EIF is committed to supporting the growth of SMEs by creating an environment conducive to their development, thereby contributing to the European economy.
“The fund will also play a key role in helping SMEs take account of environmental and social concerns. By educating and integrating these aspects into the development of European SMEs, we are strengthening their resilience and long-term competitiveness, while promoting a more sustainable and equitable future for all.”
