GENEO launches a quasi-equity fund to help small and medium-sized companies transform themselves to prepare for tomorrow's world
PRESS RELEASE
09/06/2022
The GENEO Mezzanine positive impact fund is designed to finance small and medium-sized companies in the form of quasi-equity (mezzanine). Unique in its approach, this fund aims not only to finance the growth of companies, but also to support them intensively in their innovation programme for positive impact, through a tailor-made coaching programme and significant financial incentives.
The fund is managed by Mathilde Paoli who has extensive expertise in corporate finance, having been head of the small and mid cap advisory team at Rothschild & Co.
The fund has already reached its first closing threshold, which allows it to consider its first investments. It continues to receive additional subscriptions according to the "rolling closing" principle in order to reach, by the end of 2022, a 200 million fundraising target.
For Fanny Letier, François Rivolier and Delphine Jarnierco-founders of GENEO Capital Entrepreneur The raison d'être of GENEO is to make positive finance available to the real economy. This new fund enables us to meet the needs of small and medium-sized companies which, despite a complex economic, geopolitical and societal context, wish to move forward, innovate, invest and transform themselves in order to pursue or accelerate their development, based on a sustainable growth model. The quasi-equity form of financing allows them to retain control of their capital and the positive impact plan provides them with operational support geared towards results.
Key points:
- Quasi-equity, adapted to TPEs
- A leverage effect of financing, thanks to co-investments and banking partnerships
- An intensive and operational support programme to stimulate innovation and accelerate transformation for positive impact
- Up to 100 basis points of interest rate reduction if impact objectives are met
Financing tailored to the needs of SMEs: mezzanine
The approach of GENEO approach meets the needs of SME managers wishing to finance the transfer of capital or their future investments without increasing the debt ratio and limiting capital dilution. Mezzanine allows them to strengthen their equity capital by issuing bonds that provide, for the investor, mechanisms for sharing the capital gain and, for the company, a repurchase mechanism allowing it, if it so wishes, to retain control of the capital.
A leverage effect of the financing capacity, thanks to close banking partnerships
For accounting purposes, this type of bond is classified as equity and improves debt ratios. At the same time, it also increases the company's ability to increase its borrowing capacity from its banking partners.
The presence of several major banking partners among the fund's subscribers will further strengthen this driving force.
Indeed, the co-investment mechanism set up with the fund's subscribers will make it possible to multiply by 2 or 3 the investment capacity in quasi-equity, and to have a powerful knock-on effect on bank borrowing capacity. Each euro of equity can enable companies, depending on their model and their initial indebtedness, to raise around 4 additional euros in the form of credit from their banking partners.
An intensive coaching programme focusing on innovation and transformation for positive impact
True to its raison d'être, GENEO GENEO is committed to meeting the needs of small and medium-sized companies by helping them achieve strong, sustainable and virtuous growth. In order to retain and attract talent, but also to meet the expectations of all their customers, suppliers and partners, SMIs are aware that a change of model is necessary: CSR approaches, aimed at reducing the negative externalities of an activity, remain absolutely necessary but are no longer sufficient. It is the way in which activities are carried out that must evolve towards a more positive societal impact: this implies innovation in products, services and business models.
That's why we GENEO supports companies that have invested in the implementation of a positive impact plan that aims to stimulate innovation within the company and to support the transformation processes that it entails. Each company is the subject of a tailor-made programme, based on an impact maturity diagnosis that takes into account not only its CSR maturity but also its human capital and organisation, its financial capacities and its development plan. The "positive impact" action plan is an operational programme based on the UN's Sustainable Development Goals(SDGs), which combines "quick wins" with long-term, in-depth approaches.
The Positive Impact Manager - a business partner of the GENEO team - will accompany the managers and the investment team throughout the life of the investment to implement this programme, with the support of the GENEO support team and the specialised experts of the GENEO Community.
"GENEO's ability to assist in the transformation to impact is truly differentiating in the mezzanine market," says Mathilde Paoli. Mathilde Paoli. "We offer our team and our unique system, which has been proven over the past three years on 14 invested companies, to small and medium-sized companies in all sectors of activity. Our product is very complementary to the senior impact debt that is becoming more widespread, and will enable SMIs to achieve their impact objectives, thanks to the operational support of our team.
A significant and structured financial incentive
Following the mechanism of "sustainability linked bonds", the bonds will be indexed to one or more of the impact indicators selected in the positive impact plan, and may give rise to an interest rate reduction of up to 100 basis points depending on the rate of achievement.
Depending on the achievement of these impact criteria, between 20% and 30% of the team's carried interest, as well as a fraction of the management fee, will go to the GENEO Community Endowment Fund, which supports job creation in disadvantaged areas and the reintegration of disadvantaged people into employment.
About the management company GENEO Capital Entrepreneur :
GENEO Capital Entrepreneur's raison d'être is to make positive finance available to the real economy.
GENEO provides tailor-made capital, which adapts to the pace of each company and has nearly €600 million at its disposal.
As a business partner, GENEO mobilises to provide support for the execution of structuring, growth and transformation projects thanks to its teams, but also its specialised "business partners" (external growth, positive impact, digital and innovation). GENEO also has a platform of more than 140 independent experts and a community of nearly 200 families and entrepreneurs, offering a sharing of experience and a business network unheard of in France. The terms of this operational support are adapted to the specific needs of each company and formalised jointly by the GENEO team, the management team and the company's other shareholders in a "Growth Book".
Passionate about those who make, create and want to move the lines, the sole ambition of the GENEO team is to take each entrepreneur's ambition to the highest level.
At GENEO, when we invest, we invest!
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