Kartesia, a Europe-focused mid-market private debt firm, has signaled its arrival into the impact space. The firm has registered a private company, Kartesia Impact I SV, with the Duchy of Luxembourg.
Kartesia has already introduced elements of impact investing to its portfolio. According to its sustainability report, published in July 2021, one of its four main ESG KPIs for existing portfolio companies is “Do the products and/or services of the company have a direct positive impact on the environment or society?”
36 percent of its total portfolio – €654 million – is invested in companies creating positive social or environmental impacts, the report states.
Kartesia recommends private debt impact funds offer loan margin discounts for “substantial social or environmental improvements” from portfolio companies, the firm wrote in a November 2021 guest article in affiliate publication Private Debt Investor. The authors added: “For a private debt impact strategy, providing a 50 basis points discount on a loan margin that might typically be in the region of 4 percent is significant for the underlying portfolio company but it is not a hugely material reduction in fund performance.”
Other fund managers in the market with impact debt funds include Amundi, which is targeting €1 billion and expects to hold a final close this year; Allianz, which is seeking €200 million; Tikehau, which is targeting between €350 million and €400 million; and RM Funds, which is seeking £200 million ($270 million; €239 million). MGG investment Group is also considering a dedicated impact strategy.
Kartesia manages assets worth €3.6 billion. It closed its fifth credit opportunities fund at €1.5 billion and its first senior opportunities fund at €1 billion in 2021.