France’s PhiTrust sets up European social entrepreneurship fund

PhiTrust, the French corporate governance activist manager, has become the latest firm to launch a fund under the new European Social Entrepreneurship Fund (EuSEF) regulations.

PhiTrust Partenaires has been registered as a fund manager under the new regime, one of a handful of organisations to so far get the label, which is aimed at facilitating EU-wide investment in social ventures.

PhiTrust Partenaires invests globally in a range of industries, with a special focus on funding social enterprises in Europe and West Africa. It is connected to PhiTrust Active Investors, a French asset management company that develops shareholder engagement strategies to promote good corporate governance practices among listed companies.

The EuSEF label, which came in last year, enables investors to easily identify funds that focus on investing in social businesses. To get the label, a fund has to prove that at least 70% of its capital is allocated this way.

PhiTrust Partenaires became a registered manager of EuSEF this month. Speaking to Responsible Investor, PhiTrust President Olivier de Guerre said the firm sought the EuSEF label to help it sell its products to investors outside France.

He added that a new French law, ‘la loi Economie sociale et solidaire’, which aims to support the social economy has raised the profile of the EuSEF label in the country.The law, which passed in July, has a number of objectives, including establishing a legal base for funding targeted towards the social economy. One is the EuSEF label, which de Guerre said investors were now looking into. “The law gives a legal definition to institutional investors to invest in EuSEF,” he said.

Speaking about the logistics of getting the label, de Guerre said it took a long time to convince the French financial regulator. “As we were the first to apply the regulator had to learn the specifics,” he said. “It is mainly focused on the alternative investment fund managers directive (AIFMD) than on EuSEF.”

Under AIFMD, the EU is developing an internal market of alternative investment fund managers through a harmonized regulatory framework.

He said while there was work to do to educate the French financial system, and even French social businesses, about the EuSEF label, he said he expected it to develop.

“I’ve been in discussions with large institutions in France and Europe who are looking for either the EuSEF or the AIFMD label. They won’t invest without it. My belief is that the EuSEF label will develop as it is a lighter regulation.”

Germany-based social investor BonVenture became the first registered manager of EuSEF in April. Responsible Investor understands that the Portuguese Social Innovation Bank is also seeking to create a fund under the EuSEF regime.