P Capital Partners (PCP) is an active credit investor and loan provider to mid-sized Northern European companies. They act as a strategic partner to family-owned and entrepreneurial companies. We interviewed PCP’s CEO Daniel Sachs and Investment Associate and Head of ESG Marjo Koivisto to learn more about their approach to credit investing, including sustainable investments.

PCP was founded in 2002 within the Swedish investment firm Proventus AB. PCP raised its first institutional fund in 2009 and subsequently became an independent management-owned firm in 2013.

In the past 10 years or so, the private credit market in Europe has exploded, and now, as the market is maturing, it’s also becoming more differentiated. However, in Europe, around 85% of the private credit market is focused on sponsored transactions (ie. deals led by financial sponsors such as private equity funds) PCP’s focus is on the remaining 15% – non-sponsored lending, focusing on family-owned and entrepreneurial companies. They are the largest player in Europe in their own niche, and additionally collaborate with sponsors.

“The non-sponsored transactions are a part of the market that suits us and our history really well, as PCP itself comes out of a family-owned business. We have a lot of experience on and understanding of the types of challenges, opportunities, and dynamics of family-owned and entrepreneur-led companies,” CEO Daniel Sachs says.

Tailor-Made Solutions and Active Partnerships

PCP provides debt financing for situations like expansions, acquisitions, refinancing, and restructuring. A company typically approaches PCP when they have a very specific need of funding, where traditional sources of financing, like a bank loan, aren’t suitable. PCP’s loans range from around €15 million to up to €150 million, with typical loans ranging between €20-60 million. In their own words, they are ‘flexible and creative problem solvers’.

“We find out what the company’s needs are in their specific situation and tailor the right solution for each company. Often, when a company comes to us, the management team is weighing different potential growth paths – whether to expand operations or focus on R&D efforts, for instance. As active partners for the companies we fund, we can help them make these decisions,” Sachs says.

“We aim to bring added value to the companies we fund, and often this also comes in the form of helping them with sustainability transitions,” Investment Associate and Head of ESG Marjo Koivisto adds.

Investing in Sustainability Transitions

PCP has a long history of being a macro-driven, socially conscious investor, and the way they look at ESG extends far beyond exclusion.

“One of the biggest opportunities we see in the market is investing in core business sustainability transitions. It’s also where the greatest need for capital will be in the upcoming years, so PCP seeks to be an active lender in that area,” Koivisto says.

PCP invests in a broad palette of industries, industrial and consumer businesses included.

“We are seeing much transition in food production, energy, agriculture, and the textile industry. In textiles, for instance, there are huge opportunities for transitioning into circular business models. Digitisation and companies’ ability to now use established general purpose technologies such as advanced analytics is also adding value to existing operations and supporting business models,” Sachs and Koivisto conclude.