Meridiam dials up impact with new funds and monitoring tool

The Paris-based firm has raised more than €5bn this year across five strategies, all of which qualify as Article 9 funds dedicated exclusively to sustainability.

Meridiam this year has raised more than €5 billion, increasing its assets under management but at the same time solidifying its impact investing credentials.

The capital raised in 2021 brings its total AUM to €15 billion, a roughly 80 percent increase on its 2019 total of €8.5 billion.

All five new funds qualify as Article 9 funds under the new EU Sustainable Finance Disclosure Regulation. “Therefore, those new funds will specifically have sustainable goals as their objective,” Meridiam said in a statement.

Two of the five new vehicles are successor funds: Meridiam Sustainable Infrastructure Europe IV, which reached its €2.3 billion hard-cap five months after its launch; and Meridiam Infrastructure Africa Fund II, for which the firm raised more than €500 million, roughly two-thirds of its €750 million target.

Another €290 million has been raised for The Urban Resilience Fund, an impact fund Meridiam launched in partnership with the Rockefeller Foundation and the UN’s Capital Development Fund, to support cities in Europe and Africa deliver resilient infrastructure projects.

The Green Impact Growth Fund is a new offering and a completely new strategy for the Paris-based firm, since it is a growth equity fund that will invest in SMEs. “GIGF has already raised more than €150 million and will invest across five sectors: low carbon economy, circular economy, sustainable cities and smart buildings, clean mobility and sustainable agriculture and food,” according to the statement.

The fifth vehicle is the Meridiam Sustainable Waste & Water Fund, which is dedicated solely to New Suez, the company that is being carved out of French water company Suez that Meridiam is acquiring alongside Global Infrastructure Partners and France’s Caisse des Dépôts.

Demonstrating impact

“But the very important thing for us is not only that these new funds qualify under Article 9, but also that we can demonstrate through a new tool the concrete contribution of our projects against the UN’s Sustainable Development Goals,” a Meridiam spokesman told Infrastructure Investor.

“Everybody today talks about impact, sustainability or being in line with UN SDGs,” the spokesman continued. “But for Meridiam, what’s important is to prove and to demonstrate how you actually contribute to meeting them.”

To do so, Meridiam developed Simpl, a tool that allows the firm to monitor and measure the impact of each of its 100 projects. Simpl was launched a year ago – a scientific committee was set to oversee its development – and tested on the assets comprising MAIF I.

This proprietary tool not only allows Meridiam to monitor and measure its assets but also allows its clients to do so as well.

“It’s not a black box that only we can monitor,” the spokesman explained. “We give access to the investors that are invested in our funds so that they can not only see the result but also how we arrived at that result.”

To do that, all SPVs within Meridiam’s portfolio are required to complete a questionnaire, providing figures and stats in their answers.

“We’re also setting targets for the next three years,” the spokesman said. “For every single asset, the results we have this year will serve as the baseline from which to grow in the next three years. We want every single asset to not only raise their expectations but to improve their results and increase their contribution to the UN SDGs.”

As for target setting, Meridiam sets environmental and social targets with investors when creating a fund. According to its 2021 impact report, if Meridiam underdelivers in terms of impact , then the firm abandons up to 20 percent of its carried interest entitlement, even if the fund outperforms financially. “The carried interest waived by the team will be paid into a foundation to ensure that we are aligned with investors and that money can do good in other ways,” according to the report.

In addition to launching these five new funds and implementing a new proprietary tool, Meridiam is also in the process of registering as a Benefit Corporation in the US. It had already changed its status to B Corp in France in 2019.

“We have already completed the pre-impact assessment and we are waiting now for the final pillar – certification – that will make Meridiam a global Benefit Corporation,” the spokesman said.