Eiffel Investment Group, an asset manager based in Paris, has announced the launch of its third impact private credit fund called Eiffel Impact Debt III. The fund's purpose is to support the environmental and social transition of mid-sized European companies through impact-linked financing agreements, and to provide financing support for them. The project is based on impact investing, private credit, sustainable finance, ESG goals and European companies.

The fund raised €500m at its first close, with Eiffel Investment Group aiming to raise a maximum of €1bn (around USD$1.14bn). The fund will be primarily devoted to debt financing for companies looking for growth capital, and it will integrate sustainable measures into financing agreements.

A fund to finance senior loans for mid-sized companies in Europe.

Senior debt lending and co-investment will be available to 40-50 European mid-sized companies via Eiffel Impact Debt III. The fund will take a similar line of business as earlier vintages, targeting secured senior financing, controlled leverage, capital preservation and risk adjusted returns.

The financing strategy aims to provide a long-term growth strategy for the companies, taking into account a focus on financial stability. All investments will be designed with contractual agreements that link environmental, social and governance (ESG) goals to the work of businesses.

Impact Covenants Linked to ESG Performance

The new fund aims to have three focus areas: climate transition, ecosystem preservation and diversity, according to Eiffel Investment Group. The concept of “Impact Covenants” that were part of financing agreements is being continued as a strategy in the approach of earlier vintages and will be included in the fund.

These covenants are tied to certain terms of loans to meet measurable ESG goals. The design is intended to drive companies to enhance their sustainability efforts, provided they have access to funding for their business and growth.

The first investments were made as the pipeline was being built.First investments were made as pipeline was being constructed.

Eiffel Impact Debt III has already made its first three investments, Eiffel said. The fund has also identified an investment pipeline of approximately €400 million, more than half of which concerns companies that are not based in France.

“The investments will include a set of European companies that are active in the transition-related priorities, and will be targeted to those where the financial assistance can be aligned to measurable environmental and social advances.”

This is an example of Eiffel Highlights Financial Discipline and Measurable Impact Approach.

“It is the third fund that demonstrates the approach of Eiffel Investment Group, to respect financial discipline and measure impact goals,” said Fabrice Dumonteil, Chairman of Eiffel Investment Group.

As in the past, this third fund was created on the belief that a disciplined process of investing along with the measurement of the impact can make companies we invest in perform better in the long term, said Dumonteil.

Eiffel Impact Debt III is built on the momentum of private credit markets gradually the implementation of sustainability-linked finance models with investments that offer both financial returns and environmental and social benefits.