Carlyle backs European strategies with ESG facility

NatWest Markets acted as lead arranger and facility agent, while Crédit Agricole acted as ESG coordinator and agent.

The facility will act as the main line of credit for Carlyle's funds in Europe.

Carlyle held a final close for Carlyle Europe Technology Partners IV in January 2019 on EUR 1.35bn. The fund was 56% deployed as of June 2021, according to Unquote Data. The vehicle backs European lower-mid-market companies focusing on the telecommunications, media and technology sectors.

The GP's fifth European buyout fund held a final close in October 2019 on EUR 6.4bn. The vehicle was 46% deployed as of June 2021, according to Unquote Data, and typically backs buyouts of European companies with enterprise values greater than EUR 200m. The vehicle's recent platform investments include UK-based clothing and footwear retailer End Clothing.

The facility is linked to three ESG-related goals, according to a statement. Firstly, Carlyle aims to achieve its 30% board diversity target for each portfolio company. In addition, Carlyle also intends to implement more accurate and comprehensive measurement of greenhouse gases for its portfolio companies. Lastly, the GP intends to provide ESG-competent training for all Carlyle board directors, with the aim of achieving better governance outcomes.

Carlyle said in the same statement that it has found that the average earnings growth of its portfolio companies that have two or more diverse board members is around 12% greater per year than companies with less diversity.

The GP secured the largest-ever ESG-linked credit facility in the US earlier in 2021, taking a USD 4.1bn facility with targets linked to board diversity. Carlyle's AlpInvest secured an ESG-linked credit facility for AlpInvest Co-Investment Fund VIII (ACF VIII) in May 2021, as reported.

Carlyle joins the ranks of GPs including CapMan, Waterland and ICG that have recently announced ESG-linked credit facilities for their funds, with interest repayments linked to the achievement of specified ESG targets.

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