The First Italian ESG Credit Fund Will Invest 60 M to Finance SMEs Supply Chain

Alternative Capital Partners sgr (Acp sgr), an Italian company founded with the mission of combining ESG principles and innovative alternative investments with a high impact on the environment and real economy, announced the second closing of SMEs Alternative Credit Fund (Smac), the first Italian closed-end ESG alternative investment fund (AIF) specialized in credit trading, created to support companies that need short-term liquidity instruments alternative and/or complementary to traditional banking products and services.

In the operation of the Smac fund, the exclusive partnership with CashInvoice, among the leading Italian operators in the invoice trading sector, plays an important role. Active since 2017 with over 200 million transactions executed, CashInvoice’s fintech platform has a portfolio of over 350 assigning companies and 1,700 assigned debtors, and shares with Acp sgr the full commitment to the principles of sustainability, so much so that it is in the process of becoming a benefit company as a certified B-corp. In addition to providing the technological platform, CashInvoice – as portfolio agent – is involved in origination and onboarding through fully digital processes of opportunity selection, pricing proposal processing, credit risk assessment, cybersecurity, and fraud management. Acp sgr, as fund manager and program agent, is in charge of portfolio control and monitoring, of ESG analysis and assessment, and of the definition of the final pricing of the credits to be acquired.

Smac fund is an innovative supply chain finance tool for SMEs and micro-enterprises, whose activity consists mainly in the non-recourse purchase of performing trade receivables, through ABS financial instruments and a digital fintech platform, and in the trading of Super/Ecobonus tax credits. Smac is the first Italian green alternative credit trading fund to be classified as an ESG fund in accordance with art. 8 of the European SFDR regulation, as it favors – in its investment selection and evaluation process – the most virtuous companies in terms of sustainability, through a proprietary methodology that combines an internal ESG assessment and an external ESG scoring through Moody’s Analytics.

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The fund provides liquidity in a very short time (48-60 hours) to Italian companies

The fund has completed the second closing with a group of leading institutional investors, for whom it represents a unique investment solution since it is one of the most liquid asset classes among those of the private market, highly diversified, not very volatile, and completely unrelated to the performance of stock exchange listings and traditional asset classes. The fund distributes interest to investors every six months with a fixed coupon of 3% per annum, with an expected net financial return on the invested portfolio of over 5% per annum and reduced risk profiles and capital absorption for certain types of investors. The mitigating risk factors are represented both by the full coverage of the disbursed credit – provided by a leading insurance company with S&P AA and Moody’s Aa3 rating – and by the wide portfolio diversification based on a multi-originator and multi-channel credit sourcing model, activated in partnership with leading operators in the financial and industrial sector, including the same institutional investors subscribers of the fund.

Thanks to its multi-originator and multi-channel approach, Smac has executed in less than 5 months of operations transactions of commercial credits and Super bonus tax credits for over $69.6 million (€60 million), involving primary institutional investors active in the reference territories and achieving a financial return higher than the target one. In terms of environmental sustainability objectives, the investments already made by the fund in Super bonus tax credits will contribute to the realization of interventions related to over 600 energy requalification projects of residential buildings, generating an estimated impact of carbon dioxide reduction of over 3,000 tons/year.

The fund provides liquidity in a very short time (48-60 hours) to Italian companies mainly active in the tertiary, manufacturing, and construction sectors, including those active in the energy requalification of buildings. Smac’s customers include both big companies in the energy sector and small district construction companies, as well as an industrial consortium gathering more than 50 SMEs operating in the energy and civil plant engineering sectors.

Smac’s portfolio management is entrusted to a dedicated team of professionals with a solid track record in digital lending, structured finance and management, and trading of commercial and tax credit portfolios, as well as in the fintech world. The professionals involved in managing the investments through the sgr, but also co-investors in the fund with a typically Anglo-Saxon mechanism of “skin in the game”.

Evarist Granata, managing director and head of private capital investments at Acp sgr, explained, “The ECB estimated that from 2011 to 2017, bank loans to Italian SMEs decreased by over $116 billion (€100 billion), a situation exacerbated by the effects of the pandemic on the economic and production system in Italy. Small and medium-sized companies need to find immediate liquidity even outside traditional channels to support the growing working capital needs along with all supply chain processes towards domestic and/or foreign customers. We believe, therefore, that credit trading is becoming an increasingly attractive emerging asset class in Italy, which by 2022 will reach an estimated potential value of over 500 billion euros including the primary market of performing trade receivables and the secondary market of Super/Ecobonus tax credits.”

Emanuele Ottina, president and head of business development and fundraising at Acp sgr, added: “The Smac fund can count on the experience of Acp sgr in the world of sustainable alternative credit investments and of CashInvoice in the world of fintech for digital credit services, representing in fact today the only solution available on the Italian market that offers, on the one hand, liquidity services in favor of small and micro Italian companies projected towards sustainable development objectives, on the other hand, an investment opportunity for primary institutional investors interested in having a short-term credit instrument with high coupon yields against an extremely low-risk profile and capital absorption, while at the same time diversifying their investment portfolio in alternative private capital instruments. “

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