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At the end of 2020, Hg was successful in creating and completing a pioneering, diversity-linked financing package to support the acquisition of a recent portfolio company.

This was for Septeo, a European Legal Tech leader in which Hg’s Genesis 9 Fund invested (announced November 2020).

Since recent ESG financings have focused on greenhouse gas emissions and Hg’s portfolio companies typically have a relatively low environmental impact, Hg worked alongside lenders to create sustainability criteria more aligned with the firm’s values in diversity, inclusion and other governance items.

The result was a broadening of the traditional definition of ESG to become ESGD (Environmental, Sustainability, Governance and Diversity), thereby including diversity-linked criteria to promote diversity and that, if met, will reduce the annual interest cost for the company.

These criteria include:

  • the implementation of internal policies to ensure balanced and inclusive recruitment processes at all levels of the organisation; 
  • the tracking of diversity statistics including gender, ethnic and LGBTQ+ across all levels of the organisation; 
  • increasing the ratio of female employees year-on-year;

Goldman Sachs and PSP Investments were the lenders, Goldman Sachs was the arranger.

Photo by Raül Santín on Unsplash

“We believe that this arrangement, with its focus on diversity, is amongst the first of its kind and will hopefully continue to help demonstrating Hg’s commitment to diversity and inclusion, whilst also showing a very positive example to the industry of how investors can act as stewards for positive change across the business world. This is the first of many examples for us to implement across the portfolio.”

Juan Campos

Partner at Hg and a Member of the Capital Markets Team

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