Diversity at the heart of investment: ESGD Financing at Hg
At Hg we believe that better diversity and inclusion (D&I) translates into a more positive impact for all stakeholders in business – investors, portfolio companies, employees and the communities where we work and live. Hg has made significant steps to become a more diverse and inclusive firm in recent years and it is an initiative that we also look to promote through our family of portfolio companies.
In line with this agenda, the Hg Capital Markets Team have been actively looking at how financing agreements can help integrate D&I into the Hg portfolio.
At the end of 2020, Hg was successful in creating and completing a pioneering, diversity-linked financing package to support the acquisition of Septeo, a recent investment for Hg.
A few months later, in early 2021, Hg has been able to continue this strategy, agreeing terms to tie lending terms to ESGD (Environmental, Social, Governance and Diversity) related targets for an additional portfolio company, team.blue.
In November 2020, Hg announced in investment in Septeo, a European Legal Tech leader.
Since recent ESG financings have focused on greenhouse gas emissions and Hg’s portfolio companies typically have a relatively low environmental impact, Hg worked alongside lenders to create sustainability criteria more aligned with the firm’s values in diversity, inclusion and other areas of governance.
This broadens the traditional definition of ESG to become ESGD (Environmental, Social, Governance and Diversity) and means interest costs will be reduced if diversity-linked criteria are met.
Goldman Sachs and PSP Investments were the lenders, Goldman Sachs was the arranger.
team.blue is a leading digital enabler for companies and entrepreneurs across Europe.
At the beginning of 2021 team.blue agreed to tie their lending to ESGD-related targets in a financing arranged by Credit Suisse and J.P. Morgan.
Two key ESGD focus areas will impact their facility margin:
As part of the commitment, team.blue agreed to provide the creditors with:
Hg sees these first two initiatives as an additional way to encourage our portfolio companies to improve their ESGD performance and it is something we will continue to promote.
Photo by Raül Santín on Unsplash
“We believe that these arrangements, with focus on diversity, are amongst the first of their kind and will hopefully continue to help demonstrating Hg’s commitment to diversity and inclusion, whilst also showing very positive examples to the industry of how investors can act as stewards for positive change across the business world. These are the first of many examples for us to implement across the portfolio.”
Partner at Hg and a Member of the Capital Markets Team