Impact Private Credit
Building on our track record in impact private credit, we focus on constructing a diversified pan‑European portfolio of private credit instruments to capitalize on the attractive opportunities in this asset class – driving positive measurable impact alongside attractive risk-adjusted financial returns.
What we do
Our Impact Private Credit team underwrites private debt for mid- and lower mid-market companies with the aim of capturing the attractive and growing financing opportunity in Europe. We concentrate on core impact themes that are aligned with the UN Sustainable Development Goals (SDGs).
We place a strong emphasis on capital preservation to generate consistent, risk-adjusted returns. Our activities are focused primarily on senior secured unitranche financing and, to a lesser extent, on subordinate debt, with possible participation in equity co-investments alongside the financial sponsor and management teams. We mainly target sponsor-backed companies but also tier one management-owned businesses in Northern and Western Europe.
Our approach – why partner with us
We see strong alignment between positive, sustainable impact and risk-adjusted returns. To capture the compelling opportunities in this space, we offer a powerful combination of impact leadership and private credit capabilities. Our track record underscores our strengths, including:
- Focus on generating impact – As a lender, we are guided by the explicit intention of generating positive, measurable impact alongside a financial return to help tackle the social and environmental challenges of today and tomorrow. Impact management and ESG are therefore fully integrated into our deal process.
- Driving diversification – Our portfolio is specifically designed to reflect the diverse nature of the impact market and prioritizes three key impact themes: Climate action, inclusive growth and healthcare. We select companies with innovative business models that focus on a wide range of themes – from energy efficiency to green cities and mobility to sustainable agriculture, supply chain management or recycling – helping to support the transition to a low-carbon circular economy.
- Robust underwriting process – We follow the same stringent multi-stage underwriting process in impact private credit as with our traditional private credit activities.
- A high level of transparency and accountability – We are committed to providing comprehensive impact and financial reporting around all our activities. The impact of investments is verified and tracked, with KPIs mapped to the applicable SDGs and, where relevant, to specific SDG targets and indicators, and then reported transparently to our investors.
- Flexible approach to customized impact solutions – We have significant experience in designing and implementing customized solutions and separate accounts for investors looking to access impact investments.
Team – significant private credit and sustainability know-how
Our Impact Private Credit investment team is responsible for sourcing, analyzing and negotiating private debt investments. The team is further supported by professionals specializing in areas such as legal, risk management and assessment, portfolio monitoring, loan servicing and treasury, as well as fund reporting.
Matthew Gordon Clark
Climate action, inclusive growth and healthcare
"The development of an impact private debt strategy was a key priority for us in order to further align our values with our investment activity. Our impact strategy relies on three major investment themes: climate action, inclusive growth and healthcare. We are not only looking to access best-in-class impact companies but also those that are committed to improving their impact profile over the term of our investment. The key differentiating criteria of our approach are our strict ambition in terms of measurement, given our commitment to closely evaluate and monitor performance against impact targets, while contributing to the implementation of the relevant reporting tools. The team supports investees at all stages of their impact journey, especially by co-building their impact action plan and introducing economic incentives for the realization of specific targets that are aligned to the enhancement of their impact profile and their product or service offering."
Drive change in the ESG space
"When I joined LGT Private Debt in July 2019, I was immediately struck by the firm’s level of sophistication and the commitment to driving change in the ESG and sustainability space, both as a manager and an investor. We have a reputation for being a sustainability pioneer and the logical next step was for us to extend our capabilities in order to intentionally support companies that directly address some of the world’s biggest social and environmental challenges. Drawing on our experience in direct lending since 2005 and working closely with LGT Capital Partners’ ESG and impact community across asset classes, we have launched Private Debt’s first (Article 9) Impact Fund, which will invest in companies making tangible contributions to tackle these issues. On a personal level, it has been great to be part of this initiative and I am confident that we will help our investee companies to accelerate their growth and realize their ambitions."