LGT Private Debt, a unit of the $80 billion alternatives firm LGT Capital Partners, has linked the interest rate to certain ESG targets for a recently arranged debt facility, a spokesperson for the firm told New Private Markets.
LGT was the co-arranger and co-underwriter, alongside CAPZA, of a unitranche financing to support the acquisition of Groupe Blanchon by private equity firm IK Investment Partners and Abénex, which is reinvesting in the deal. Groupe Blanchon manufactures various types of wood finishing products, such as lacquers and oils.
As is often the case with this type of arrangement, many of the specifics remain private.
“Should the company meet a certain number of ESG-related criteria, the interest rate will change,” the spokesperson said. “Noting that these criteria must be met every year for the ratchet to remain effective.”
As well as the “ESG certificate that must be established in relation to the interest rate”, the spokesperson continued, the company must also respond to an annual ESG questionnaire and arrange for an annual carbon emissions assessment with a third party expert.
CAPZA aims to have a sustainability-linked interest margin for most of the loans from its next fund, managing partner Laurent Bénard told New Private Markets earlier this year.
Guillaume Claire, managing director at LGT Private Debt, said: “We have successfully partnered with IK on previous transactions and value [its] hands-on investment strategy as well as [its] experience in the industry.”
Arnaud Bosc, partner at IK, said: “LGT Private Debt has demonstrated its ability to react swiftly in understanding the strong potential of the company and in providing a flexible and tailor-made financing solution.”