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Fund to focus on small, mid-market companies

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Former Canada climate minister among advisers

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20% of carried interest to be linked to impact

By Simon Jessop

LONDON, May 23 (Reuters) - French private equity

investor Eurazeo plans to raise up to 750 million

euros ($813.08 million) for an impact-focused buyout fund

targeting companies helping the world operate within its

ecological limits, an executive told Reuters.

The Eurazeo Planetary Boundaries Fund is based on the

scientific concept of 'planetary boundaries', which define

thresholds on everything from pollution to biodiversity loss

within which the world must remain to be habitable.

Using the scientific criteria as a guide, the fund will

invest in small and mid-market companies focused on the

regenerative and circular economy or which are helping the world

transition and adapt to a climate-friendly future.

Primarily investing in firms based in Europe, the fund will

focus on sectors including agriculture, waste and low-carbon

energy, and 20% of the fund's carried interest - the share of

profits paid to the fund manager - would be linked to achieving

portfolio level impact.

The fund's launch comes as companies and the broader economy

in Europe begin the move to a more circular economy, where less

materials are used and more are reused or recycled.

That shift, part of the European Union's efforts to meet its

climate goals, is now starting to come through in the form of

tighter rules around water usage, textiles, plastics and

packaging, Managing Partner Sophie Flak said.

"Companies and the economy are finally ready for it," Flak

said. "We are seeing some small and mid-size companies which

have products, services or technology which are addressing the

planetary boundaries."

"They need money and expertise to scale and become

champions," she added, citing the example of a firm that has

developed technology to line water pipes and reduce leakage.

The fund will also be supported by an advisory board of

sustainability experts including the former head of the European

Environment Agency, Hans Bruyninckx; and Catherine McKenna,

Canada's former minister of environment and climate change.

Others on the board include Club of Rome Co-President

Sandrine Dixson-Decleve, L'Oreal's former sustainable innovation

director Lauren Gilbert, and IKEA's former head of

sustainability Pia Heidenmark Cook.

The board would advise on the fund methodology and impact of

potential investments against each of the nine planetary

boundaries, as well as help attract investors to the fund, Flak

said. Impact and financial performance would be assessed yearly.

After investing, the fund would spend 12-18 months analysing

each before agreeing a binding progress plan with management,

Flak said.

($1 = 0.9224 euros)