EQT Launches Second ESG-Linked Subscription Credit Facility
EQT has launched its second ESG-linked Subscription Credit Facility, this time to its Infrastructure business line. Its first was for its private equity business line.
The bridge facility, which is currently at EUR 2.7bn with an upper limit of around EUR 5bn, is backed by a syndicate of global financial institutions, including BNP Paribas and SEB acting as Sustainability Coordinators and BNP Paribas as Agent and Sustainability Agent.
The SCF will be coupled with a pricing model designed to inspire and incentivize portfolio companies to improve their performance in the areas of i) gender equality on the board of directors and ii) renewable energy transition, supported by iii) a fundamental sustainability governance platform.
The pricing mechanisms are directly linked to EQT’s societal ambitions around diversity and climate as well as EQT’s governance model and commitment to transparency and accountability. The aggregated results from the portfolio companies’ ESG efforts will be compared with pre-set KPI targets and eventually impact the ESG-bridge facility’s interest rate. In other words, the more ESG progress the portfolio companies demonstrate, the better the financing terms the fund will receive. At the same time, as targets are fulfilled, the societal impact will be substantial, effectively improving female board representation to 40% and the use of renewable electricity to 85% across the portfolio companies.
Lennart Blecher, Deputy Managing Partner and Head of EQT Real Assets commented: “As a responsible owner, we are continuously exploring new opportunities which can accelerate progress within the environmental, social and governance areas. A bridge facility is an excellent way of rewarding and encouraging the portfolio companies’ advancement in ESG-related areas, and by accelerating their progress we make a very tangible impact. At the same time, we are aligning interests of value-driven investors and financial institutions, joining forces in partnership to drive real change and scale our positive impact”.
Therése Lennehag, Head of Sustainability at EQT, added: “This new bridge facility demonstrates how private equity can play an instrumental role as a catalyst of change, moving the entire financial community to stimulate more sustainable businesses. As a leading market player, EQT always aims to lead by example, future-proofing companies and making a positive impact”.
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