In 2022, Capital Four helped ELCEE and Rivean Capital (majority stakeholder in ELCEE since July 2018) find a new way forward with a sustainability-linked loan financing agreement. This agreement has three KPIs tied to the periodic interest payments to incentivize Rivean and ELCEE to promote environmental and socially sustainable economic activities.
In return, ELCEE can benefit from a reduced margin in the lending arrangement, while failure to meet the KPIs will lead to increased margins. ELCEE has engaged with external consultants to form a comprehensive understanding of the various risks and opportunities it encounters in its operations. Together with Rivean, Capital Four has used the sustainability assessment to design material KPIs and related Sustainability Performance Targets (SPTs). The specific KPIs linked to the financing facility pertain to:
- Reducing Scope I & II emissions as well as beginning to measure Scope III emissions and subsequently reducing them as part of the transition plan towards Net Zero.
- Increasing gender diversity in the company with emphasis on executive positions
- Ensuring that the main suppliers sign and adhere to the company’s Supplier Code of Conduct.
ELCEE was founded in 1923 and is headquartered in Dordrecht, Netherlands. ELCEE is a leading supplier of customized parts and components, assembled products, and standard products for various industries such as food processing, construction & energy, transport, and agriculture. The company is active in the development, design, engineering, and supply chain management of industrial parts in four product groups: Castings and forgings, plain bearings, fasteners, and lifters. ELCEE operates local offices throughout Europe in combination with technical support centers in China and Poland.
“Sustainability is one of Rivean Capital's core investment themes. It is also deeply ingrained in ELCEE's daily operations. The company's solutions are more sustainable than alternatives regarding weight, waste, energy efficiency, and material circularity. The financing package provided by Capital Four has given ELCEE the necessary capital to continue its successful buy-and-build strategy in a fragmented market where it is the consolidator of choice”
Tom Muizers
Senior Partner at Rivean Capital
The custom-tailored selection of KPIs and targets allows Capital Four to support and impact the borrower's sustainability goals aligned with our assessment of ELCEE's material ESG risk factors. Establishing and successfully attaining these targets are expected to gradually improve ELCEE's ESG score, which we will incorporate into our assessment of the company's overall risk-return profile.
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