EQT Adds ESG-linked SCF to Sustainable Finance Toolset, Promoting Portfolio Sustainability
Global investment organization EQT announced today the launch of a new ESG-linked Subscription Credit Facility (SCF) to its Infrastructure business line. The new bridge facility follows EQT’s launch of an ESG-linked SCF in its Private Equity business line in June 2020.
According to EQT, the SCF is designed to inspire and incentivize portfolio companies to improve their performance in the areas of gender equality on the board of directors and renewable energy transition, supported by a fundamental sustainability governance platform. The facility utilizes an innovative pricing model, with mechanisms directly linked to EQT’s societal ambitions around diversity and climate as well as EQT’s governance model and strong commitment to transparency and accountability. Portfolio companies’ ESG efforts will be compared with pre-set KPI targets, influencing the ESG-bridge facility’s interest rate. the more ESG progress the portfolio companies demonstrate, the better the financing terms the fund will receive. The more ESG progress the portfolio companies demonstrate, the better the financing terms the fund will receive.
EQT stated that 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.
The bridge facility is currently at €2.7 billion with an upper limit of around €5 billion, and 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.
Lennart Blecher, Deputy Managing Partner and Head of EQT Real Assets said:
“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.”