MV Credit provides ESG-linked financing for buyout
MV Credit, the specialist private debt affiliate of Natixis Investment Managers, has provided an ESG-linked loan to support IK Investment Partners’ buyout of Kersia, the third-largest global player in biosecurity solutions for the food industry.
Kersia is a French-headquartered group operating in more than 120 countries with 1,800 employees, and with a turnover more than €375m.
It is a provider of biosecurity, disinfection and hygiene products to prevent diseases and contamination in animals and humans throughout the food supply chain. The company produces alkaline and acid products, disinfecting products and specific additives predominantly for the Food & BeverageFarming and Food Service industries.
“Regulation demands that the farms and food manufacturers in dairy and meat industries apply 24/7 professionalised cleaning to every surface, pipe, machine and tank,” says Caroline Guillen, Analyst at MV Credit. “Kersia provides an absolutely necessary and recurring service to an industry which has great defensive properties in challenging times.”
MV Credit’s investment rationale for lending to the buyout of Kersia also includes:
MV Credit managed to secure an investment in the Term Loan B instrument, in both the EUR and the GBP-equivalent tranches.
In the context of further sustainable finance growth in the European private markets, Kersia is one of the first LBO transactions to include a direct link between the financing loan and ESG Key Performance Indicators (KPIs). It is structured so that the interest payable on the loan varies depending on Kersia hitting three KPI targets, which improve annually.
Essentially, the Term Loan B margin is set to further increase or decrease by up to +/-7.5bps based on the annual assessment of: the proportion of green products, the reclaim of the products’ packaging from customers and the proportion of employees given the opportunity to become shareholders of Kersia.
“The ESG structuring of the debt is unique,” says Guillen. “Although a few other similar deals have been done, there is no template for this. We believe that this type of deals will be seen more often in the private debt industry and will eventually become more standardised, perhaps also through third-party ESG ratings rather than the use of KPIs.”
Malek Ghali, Director at MV Credit and who also worked on the deal, says: “This provides a great incentive for Kersia to become more sustainable. We see the start of a trend for sponsors and lenders to incorporate ESG KPIs more.”
“The challenge is that every credit is different and it is a lot of work for management teams to track and deliver these ESG targets. You cannot just copy and paste each transaction. Nevertheless, the market is very excited about this and things are heading in the right direction.”
For further reading:
About MV Credit
MV Credit is an independent private credit company founded in 2000. As one of the first companies in the industry to establish a presence in Europe, MV Credit has the most established management team in the industry, with an average of more than 20 years of experience. Since its inception, MV Credit has invested approximately €5 billion in more than 500 financing solutions, developing strong relationships with leading private equity funds over the years. MV Credit invests in senior and subordinated debt in European-based companies, targeting non-cyclical sectors and regions in which our teams have developed a strong knowledge. This expertise enables us to support value creation through financing solutions tailored to high-quality companies and active engagement with our partners.
MV Credit Partners LLP
Registered Number : OC397214
Authorised and Regulated by the Financial Conduct Authority (FCA)
45 Old Bond Street
London W1S 4QT
www.mvcredit.com
Natixis Investment Managers
RCS Paris 453 952 681
Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris
www.im.natixis.com
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.
Copyright © 2021 Natixis Investment Managers S.A. – All rights reserved
Kersia is a French-headquartered group operating in more than 120 countries with 1,800 employees, and with a turnover more than €375m.
It is a provider of biosecurity, disinfection and hygiene products to prevent diseases and contamination in animals and humans throughout the food supply chain. The company produces alkaline and acid products, disinfecting products and specific additives predominantly for the Food & BeverageFarming and Food Service industries.
“Regulation demands that the farms and food manufacturers in dairy and meat industries apply 24/7 professionalised cleaning to every surface, pipe, machine and tank,” says Caroline Guillen, Analyst at MV Credit. “Kersia provides an absolutely necessary and recurring service to an industry which has great defensive properties in challenging times.”
MV Credit’s investment rationale for lending to the buyout of Kersia also includes:
- Strong organic historical performance, outperforming the market
- Large footprint, covering more than 120 countries
- Diversified customer base
- High barriers to entry: highly regulated market, well-established players with strong reputations and high credibility
- Active buy-and-build strategy, including the purchase of Holchem in 2020
- Experienced management team with solid sector knowledge and M&A track-record
MV Credit managed to secure an investment in the Term Loan B instrument, in both the EUR and the GBP-equivalent tranches.
In the context of further sustainable finance growth in the European private markets, Kersia is one of the first LBO transactions to include a direct link between the financing loan and ESG Key Performance Indicators (KPIs). It is structured so that the interest payable on the loan varies depending on Kersia hitting three KPI targets, which improve annually.
Essentially, the Term Loan B margin is set to further increase or decrease by up to +/-7.5bps based on the annual assessment of: the proportion of green products, the reclaim of the products’ packaging from customers and the proportion of employees given the opportunity to become shareholders of Kersia.
“The ESG structuring of the debt is unique,” says Guillen. “Although a few other similar deals have been done, there is no template for this. We believe that this type of deals will be seen more often in the private debt industry and will eventually become more standardised, perhaps also through third-party ESG ratings rather than the use of KPIs.”
Malek Ghali, Director at MV Credit and who also worked on the deal, says: “This provides a great incentive for Kersia to become more sustainable. We see the start of a trend for sponsors and lenders to incorporate ESG KPIs more.”
“The challenge is that every credit is different and it is a lot of work for management teams to track and deliver these ESG targets. You cannot just copy and paste each transaction. Nevertheless, the market is very excited about this and things are heading in the right direction.”
For further reading:
- MV Credit Awarded CarbonNeutral® Company Certification
- MV Credit Gets Straight “A”s in UNPRI Assessment
MV Credit is an independent private credit company founded in 2000. As one of the first companies in the industry to establish a presence in Europe, MV Credit has the most established management team in the industry, with an average of more than 20 years of experience. Since its inception, MV Credit has invested approximately €5 billion in more than 500 financing solutions, developing strong relationships with leading private equity funds over the years. MV Credit invests in senior and subordinated debt in European-based companies, targeting non-cyclical sectors and regions in which our teams have developed a strong knowledge. This expertise enables us to support value creation through financing solutions tailored to high-quality companies and active engagement with our partners.
MV Credit Partners LLP
Registered Number : OC397214
Authorised and Regulated by the Financial Conduct Authority (FCA)
45 Old Bond Street
London W1S 4QT
www.mvcredit.com
Natixis Investment Managers
RCS Paris 453 952 681
Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris
www.im.natixis.com
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.
Copyright © 2021 Natixis Investment Managers S.A. – All rights reserved