ImpactAlpha, Dec. 1 – M&G’s Catalyst has committed $200 million to Lafayette Square’s direct lending business.
The capital is a boost for the upstart impact investment firm’s flagship credit strategy, which backs growing middle-market companies with senior secured debt. Such business loans are non-dilutive for founders, allowing them to maintain ownership and control of their companies. Lafayette’s “worker solutions” platform works with borrowers to support employee well-being and retention.
The Catalyst strategy of M&G, a spinoff of Prudential with €400 billion under management, aims to invest up to $5.6 billion into privately-owned businesses working “to create a more sustainable world.” Through the partnership with Lafayette, “we can provide business owners with the capital they need to grow while also helping improve the lives of workers in underserved communities,” said M&G’s Thierry Masson.
Lafayette says it will measure the partnership’s impact on the lives of workers.
Lafayette Square, led by Damien Dwin, ex- of Brightwood Capital Advisors, Credit Suisse and Goldman Sachs, last year raised $100 million in equity from Morgan Stanley to build an institutional investment platform to drive capital into affordable housing, basic services and local small businesses in underserved communities.
The firm has been on a hiring spree, gobbling up impact talent including Antony Bugg-Levine, Ommeed Sathe and Don Baylor.