Growth stories

FOCUS ON I‑TRACING - Ardian builds sustainability criteria into LBO funding package

  • 24 June 2022

  • Private Credit

Reading time: 3 minutes

Ardian Private Debt’s financing agreement with cybersecurity company I‑TRACING was one of its first to include financial incentives for the borrower to meet specific ESG performance criteria. Read the interview with Théodore-Michel Vrangos, President of I-TRACING, Laurent Charvériat, CEO of I-TRACING and Grégory Pernot, Managing Director Private Debt Ardian.

Why did you decide to work together on the secondary buyout of I‑TRACING?

Théodore‑Michel Vrangos: We knew Ardian as a major player in the French market, so we felt they were a very good name for I‑TRACING to work with. They also knew our market very well and asked all the right questions, which made the whole process so much easier. Thanks to that, we were able to move quickly and agree a €60 million unitranche facility for the transaction, including a €20 million acquisition funding line to support our external growth plans.

Grégory Pernot: I‑TRACING is exactly the type of company that fits our investment strategy. Cybersecurity affects every area of the economy and the market has grown quickly over the past few years. The company has committed leadership from its two founders, who have rolled a large portion of their investment into this transaction. And finally, it is a high‑quality business based on long‑term contracts with loyal customers. It has excellent visibility on its revenues and converts a very high percentage of EBITDA into cash. All in all, it’s an excellent proposition for us as a lender.

  • € 75 M

    TURNOVER IN 2021 (30%+ ORGANIC GROWTH PER YEAR HISTORICALLY)

How did you incorporate sustainability considerations into the way this transaction is structured?

GP: First of all, we believe that I‑TRACING, by strengthening the IT operations of its clients and improving the security of their systems, contributes actively to building a more resilient and sustainable future. This is also one of the first transactions in which we have granted an ESG ratchet mechanism. This provides an incentive for the company to meet certain ESG performance criteria by granting a reduction in the interest rate.

Laurent Charvériat: There are five criteria that are assessed every year, including measuring our greenhouse gas emissions and publishing an annual CSR report. If we meet three or four of these criteria, I‑TRACING is eligible for a five‑basis point reduction in the interest rate. If we meet all five, the reduction is ten basis points. Incorporating an ESG dimension into the financing agreement was a plus point for us and it definitely contributed to our choice of Ardian as our debt provider for this transaction. It’s a win‑win approach for everyone. We can achieve a lower cost of borrowing and Ardian improves its credit risk at the same time.

  • 17

    YEARS’ EXPERIENCE OF HANDLING CYBER THREATS AND OFFERING SECURITY SOLUTIONS

How has Ardian helped to support your growth strategy since the transaction closed?

T‑MV: We have worked together closely since the transaction was signed in June 2021. Ardian has helped us with ideas and information about companies we can look at, and they have also helped with additional visibility in the market through active communication around the transaction. We are very happy with the relationship because we always knew they bring more to the table than just debt.

GP: We are trying to support I‑TRACING’s growth plans wherever we can. For example, we have helped to open doors with several potential partners and clients. We aim to be a real partner in the company’s growth and not just a debt investor.

  • 300 +

    active clients (55 new customers in 2021)

  • 300 +

    EMPLOYEES IN 3 GEOGRAPHIES (FRANCE, CANADA AND HONG KONG)

For more stories like this, discover Ardian’s 2021 Annual Report