Investment firm Lafayette Square and its affiliates on Thursday (Feb. 3) signed a debt financing deal in the form of a credit facility of up to $10.6 million with Sumitomo Mitsui Banking Corporation (SMBC).
The facility will be used “to support Lafayette Square’s regionally focused middle market lending activities,” according to the news release. The credit facility could grow to up to $1 billion through an uncommitted accordion feature and includes a range of interest rates until it matures in January 2024.
“This innovative credit facility supports our core impact strategy, which combines capital and services to drive positive outcomes to the local communities in which we invest,” Andy Phelps, managing director and the head of capital markets at Lafayette Square, said in the joint announcement.
“We are proud to partner with SMBC to scale our direct lending activities and appreciate their commitment to the Lafayette Square vision of a more inclusive economy,” Phelps continued.
The credit facility includes an environmental, social and corporate governance pricing adjustment structure, and the proceeds of the funds will be used to invest in “businesses in underserved communities, that are significant employers of low- or moderate-income individuals, are non-sponsored entities, that are engaged with Lafayette Square’s impact service providers, or that are considered community development and public welfare investments by banking regulators.”
“We are proud to partner with Lafayette Square to support their efforts to reach underserved borrowers and communities,” said Aaron Franklin, head of sustainable finance and advisory group at SMBC Americas Division. “This partnership is a good example of SMBC’s commitment to support our clients in promoting and creating positive social and economic change.”