France’s Eiffel to launch impact unitranche fund
Eiffel Investment Group is launching the first impact unitranche fund for smaller funds.
The Paris-based asset manager focuses on sustainable investments. It manages around €6bn (£5.1bn) of assets, half of which is invested in private debt and €2bn of which is committed to energy transition.
Eiffel’s private debt investments typically focus on senior debt for SMEs in Europe with annual EBITDA ranging from €50m to €100m.
The firm has historically done some unitranche deals for smaller companies, but this is first time that it will have a dedicated impact unitranche fund.
“We’ve done unitranche funding in a more generalist fund for a long time but this will be the first dedicated impact strategy,” Fabrice Dumonteil (pictured), chief executive of Eiffel, told Alternative Credit Investor.
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“Looking at the unitranche market, the funds have become huge and therefore have had to focus on larger companies, so the segment below €20m EBITDA is much less crowded. We feel there is a funding gap there, financing smaller firms with €5-10m EBITDA on average.
“Sustainability-linked financings have been generalised for larger companies but for smaller ones that’s not the case. They need to transition, to decarbonise and to finance their green efforts, which is what we can help with.”
Dumonteil said that Eiffel has started to gather interest from investors and expects to announce the first closing in the coming weeks.
Wealth market potential
Private debt fund managers are increasingly tapping into the wealth market in order to diversify their sources of funding and meet their growth ambitions. Apollo Global Management has been vocal about its plans to raise $50bn (£39.3bn) from the wealth market for its private capital products by 2026.
Around 15 per cent of Eiffel’s overall asset base is retail and Dumonteil sees huge potential in the wealth market.
“We’re launching retail products in all our strategies,” he said. “We have not done it yet for private corporate debt, although this is in progress.
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“We have raised almost €350m for an energy transition infrastructure [retail or unit-linked] product that we launched last year.
“The potential of the wealth market is fantastic. Our renewable infrastructure fund is an evergreen fund so it can only grow. In three to five years it could be our largest fund, larger than our institutional vehicles.”
A new law unveiled in France late last year should give private markets investment managers a boost, Dumonteil added.
“In France, the new ‘Green Industry’ law will mandate life insurers and retirement contracts provided by insurers to include a minimum percentage of private assets,” he said. “This will be a big driver.
“We’re seeing a lot of interest from investors in the new law. The good news is that the younger generations, who have significant savings, really like the idea of financing real assets, especially those that are energy transition related and impact driven.”
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Dumonteil expects Eiffel to grow its institutional and retail products in the coming years, as it expands both in France and internationally.
“Our retail strategy will provide a second growth engine,” he said. “In the long run, it could be the same magnitude of €1bn a year that we raise through institutional channels.”
