Private Debt, SMEs, and Impact with IDICO Mezzanis 4
- Jan 20
- 3 min read
In this episode of the Private Market Square podcast, Yann Charraire welcomes Mickaël Chtrit, Investor Relations Director at IDICO, a management company specializing in private equity and private debt investments.The discussion provides a clear understanding of private debt funds, how they operate, the different types of financing (mezzanine, unitranche, flex equity), and their essential role in financing French SMEs.
The goal of this episode is to provide an educational perspective on alternative financing strategies and the role of private debt funds in portfolio diversification, while incorporating an Article 9 ESG approach for positive environmental and social impact.
What is a private debt fund?
A private debt fund provides an alternative source of financing to traditional bank loans, particularly useful for unlisted SMEs.Due to strict banking regulations, banks are often unable to finance certain SMEs. Private debt funds, such as IDICO Mezzanis 4, therefore step in to:
Finance capital development and business succession projects
Complement or replace equity financing
Offer solutions for business owners seeking to avoid equity dilution
This approach allows SMEs to access structured financing while benefiting from the active support of management teams.
IDICO: management company and Mezzanis 4 fund
IDICO is a management company specializing in private investments, founded in March 2023, with teams having over 20 years of experience in private equity.The IDICO Mezzanis 4 fund benefits from a strong shareholder providing its own capital to support investments and secure fundraising.
The fund primarily targets:
French SMEs valued up to €250 million
Investment tickets of around €10 million
Diversification across approximately 15 SMEs for a €250 million fundraising target
Types of financing offered
IDICO Mezzanis 4 uses several financial instruments to meet company needs:
Mezzanine: issuance of bonds offering cash interest, PIC interest (capitalized and paid at maturity), and BSA (warrants to acquire shares).
Unitranche: financing with cash interest only, simplifying the capital structure.
Flex Equity: a combination of mezzanine debt and a minority equity stake, providing flexible financing tailored to business owners’ needs.
This combination, called a blend fund, allows for risk management and optimized returns for investors.
Company selection and support
IDICO Mezzanis 4 selects investments based on several criteria:
Company size: SMEs up to €250 million
Quality and expertise of management
Project viability and return potential
Active fund involvement in governance bodies to anticipate and manage risks
This approach ensures personalized, hands-on support, maximizing the success potential of funded SMEs.
Returns, macroeconomic context, and rates
The fund targets an IRR of around 10%, thanks to:
Recent normalization of interest rates
Structuring adapted to SMEs’ needs
Rigorous selection of high-performing companies and experienced management
The strategy takes into account the European economic context and the need for vigilance in a post-pandemic and volatile environment, while leveraging France’s rich economic ecosystem.
Concrete investment examples
BioCyl: wood pellet producer contributing to decarbonization and reindustrialization.
Hospitality business: supported during the COVID period, highlighting the importance of active guidance to overcome crises and generate value.
Other investments: HVAC, health, insurance brokerage, illustrating the fund’s sectoral diversification.
These examples show how IDICO Mezzanis 4 combines financial performance with social and environmental impact.
ESG and Article 9 fund
IDICO Mezzanis 4 is an Article 9 fund, fully integrating ESG criteria:
Decarbonization: reducing carbon emissions and making responsible supplier choices
Quality and job creation: gender diversity, value distribution, training, and talent retention
Funded SMEs benefit from a monitoring methodology, with financial bonuses or penalties based on achieved progress.
This approach aligns financial objectives with positive social and environmental impact.
Comments