How does Enerfip rate its projects?

As an investor, have you ever wondered what the ratings assigned to a project really mean? Why is a project rated B rather than A? Are there any projects rated G? Is it wise to invest in a project rated C?

Ranking from A to G, these ratings – located at the top right of a project page – make it easier to understand the risk profile of the project based on the project's security level and the sponsor's rating. A crucial step in the project selection process,

gives you an indication of the project's risk/return ratio. To learn more about this topic, we invite you to continue reading! 👇

Why does Enerfip rate its projects?

As a Crowdfunding Service Provider (PSFP), approved by the Financial Markets Authority (AMF), Enerfip has developed a set of analyses and investment selection procedures. But why? In accordance with Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for entrepreneurs, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (Chapter IV Investor Protection, Article 19 Client Information, paragraph 6), “if crowdfunding service providers assign credit scores to crowdfunding projects or offer pricing for crowdfunding offers made on their crowdfunding platform, they shall provide a description of the methodology used to calculate those scores or prices. If the calculation is based on unaudited accounts, this must be clearly stated in the description of the methodology.”

In short, this means that crowdfunding service providers, like Enerfip, must explain how they calculate credit scores or interest rates for projects on their platform. This explanation should help you better understand the evaluation process. This way, you can make your investment decision with complete transparency!

What criteria are studied?

For the analysis, we take into account the sponsor's rating and the characteristics of the project under study, in order to assess the repayment capacity of the company as well as those of the underlying project.

The sponsor's rating

So what about the sponsor's rating? How is it calculated? We have a scale ranging from A+ to E (A+, A, B, C, D and E) and each of the assessments relates to a characteristic of the sponsor.

• A+: The sponsors belong to a parent company with excellent financial capacity.
• A: The sponsors are attached to a holding company with very good financial capacity.
• B: The sponsors are attached to a holding company with good financial health and which benefits from experienced management and an excellent reputation.
• C: The sponsors have a recent activity and have an experienced management team. Furthermore, the technology developed is mature (solar, wind, charging station, etc.).
• D: The sponsors have a recent activity and are marketing an innovative solution. They have passed the prototype stage and need to finance their commercial development. It should be noted that such an operation will mainly be carried out in equity.
• E: The sponsors are in the seed phase and must finalize the design of their solution. An operation proposed by this type of project leader will be carried out in equity.

The viability of the project

Regarding the project's security level, we base ourselves on 8 criteria.

1. The structuring of the issue:is it a project company or a holding company?
2. The geographical area:depending on the territory in which the project is located, the risk and the risk-free rate (yield of government bonds) of this country vary.
3. The financing instrument:is it bonds or shares?
4. The stage of progress of the project:is it a project in development, Ready to build or in operation?
5. The existence oflegal and/or financial security: Is it a pledge from the project company, a non-possessory pledge, or a GAPD (guarantee on first demand)?
6. The status of the bank financing: Has bank financing already been obtained prior to the issuance of bonds for a project?
7. The ranking of the financing: If Enerfip's bonds are senior, it is a priority repayment, otherwise it is junior.
8. The technology: What technology is used? Mature technologies or activities such as photovoltaics or sustainable real estate, biogas, or innovative technologies such as hydrogen?

You now know the criteria for rating a project! But how is this note symbolized? More right after! 👇

What does the project rating mean?

🤔 Did you know?

We reject nearly 80% of the projects submitted to us, which would be rated D or lower in our grid (unless we offer these products in the form of shares, which better corresponds to this risk category).

This is probably the paragraph you're most looking forward to! We're going to reveal the meaning of each of the ratings, which will guide your investment decision.

For the so-called "Debt" category

Divided into 4 main categories, the ratings assigned by Enerfip range from A to G, with certain variables such as + and -.

💡 Good to know

Each rating description aims to illustrate an example. Indeed, the projects cited are examples among many possible combinations to achieve each rating.

• A+/A/A-: with the best rating, these are of course the safest projects. What does that mean? They may be ready to build, supported by a sponsor with a parent company with good financial capacity...
• B+/B/B- : This rating reveals that the project has good potential, because it is at a secure stage, even if the sponsor is rated B or C.
• C+/C/C- : These are projects in development supported by category B or C sponsors.
• D+/D/D- : These are projects in development or innovative, supported by category C sponsors with weak guarantees or securities.

For the so-called “Action” category

To conclude this article, let us also explain the ratings given to so-called “Action” projects. Just as before, they are categorized into 4 ratings in order to establish a ranking between them.

• D+/D/D- : these projects, often in development or innovative, have already generated or secured revenue and are supported by category C sponsors.
• E+/E/E- : even if these projects have demonstrated technical feasibility and present promising commercial development prospects, they require funding to launch their commercial activity.
• F+/F/F- : this is financing for initial prototypes, therefore, they will not be offered on Enerfip, even in the form of shares.
• G+/G/G- : the activity of this type project never really started. Therefore, they will not be offered on our platform, even in shares.

👀 To learn more about project rating criteria, we invite you to consult our dedicated page: Rating fundraising: what are the criteria?

So, if you want to invest in the energy transition, directly in renewable energy production, energy efficiency, or sustainable mobility projects, take advantage of Meet the Investor Relations team!