Capza creates ‘impact bonus’ for ESG credit fund

Linking remuneration to decarbonation targets 'led us to winning' €120m mandate, says the Paris-based firm.

Paris-based Capza has secured a €120 million mandate from French insurer MAIF to invest in environmental impact opportunities and has set up an impact bonus as part of the strategy.

Capza’s subsidiary Artemid will deploy the capital through an evergreen vehicle, the MAIF Dette à Impact Environnemental Fund. It will provide around 15 companies with senior debt, with a five-to-eight-year maturity.

Artemid specialises in providing senior loans to mid-cap companies and two-thirds of loans issued since 2020 include ESG criteria in their pricing.

The fund is classified as Article 9 under SFDR Regulations and Capza is linking its remuneration to the portfolio’s decarbonation trajectory.

“Unlike other strategies where the carried interest is cut if the ESG target is not reached, as this fund had no carry we have decided to set up an Impact Bonus,” Annie-Laure Servel, managing partner of Artemid SAS and Aurore Gauffre, head of Sustainability & impact of CAPZA told New Private Markets.

As it is a bonus, it means that it is acquired only if the fund reaches both the financial and extra financial performance; this extra-financial performance is based on both decarbonation and level of ESG standards at the portfolio company level.

“It was only part of the overall approach that was presented during the tender offer and led us to winning this mandate,” they added.

Artemid will deploy MAIF Dette à Impact Environnemental Fund in line with MAIF’s “société à mission” status and will support companies in their decarbonation trajectory in line with the Paris Agreements.

The fund has already financed two companies, IT solutions providers Constellation and Visiativ, and is in the process of financing a third one.

Capza will compare the carbon intensity of portfolio companies at exit versus at entry, the firm told New Private Markets. “We will measure the carbon footprint of our portfolio companies in the year of our investment and, as part of our regular analysis, we will update it on an annual basis. We will then include the carbon footprint reduction target in the credit documentation.”

“We are convinced by Artemid’s selection process, which results in an attractive and resilient risk/return profile, and by their offer to support companies on their sustainability journey. We also appreciated their proposal to link the investment team’s remuneration to the portfolio’s decarbonation trajectory. This represents a new step in our policy of constantly seeking a positive impact,” Carole Zacchéo, CIO at MAIF added.

Capza has made climate change one of its priorities and recently launched a midcap LBO fund focused on decarbonation.