Astorg has secured a €1.5 billion ESG-linked subscription credit facility, whereby the cost of credit is linked to the French private equity firm’s performance against certain ESG KPIs.
Astorg is in market with its eighth flagship buyout fund, which launched fundraising in September 2021 with a €6.5 billion target. It is not clear whether the credit facility is for this fund.
The credit facility was financed by a banking syndicate arranged by CACEIS, the fund financing arm of Credit Agricole, according to a statement from Astorg. The Royal Bank of Canada and Société Générale acting as “sustainability co-ordinators”, the statement said.
The pricing is linked to Astorg’s performance against three KPIs that are measured annually. These are: the percentage of portfolio companies with improved EcoVadis scores; the percentage of portfolio companies to have submitted decarbonisation targets to the Science Based Targets initiative; and the share of women in the firm’s investment team.
A handful of private fund managers have secured credit facilities priced to non-financial metrics: among them, Carlyle, Cinven, EQT and Baring Private Equity Asia. Such facilities typically involve a discount of up to 10 or 20 basis points on the loan margin if pre-agreed KPIs are met.
It is a relatively recent trend. ING Bank announced the “world’s first” ESG-linked capital call facility for a private equity fund in October 2019. It was a $65 million, three-year credit line with Singapore’s Quadria Capital. Eurazeo then struck a €1.5 billion credit facility in January 2020 with a consortium of banks including JPMorgan, Citibank, Goldman Sachs and BNP Paribas.
In the ensuing three years, Carlyle and EQT have established themselves as some of the biggest proponents of sustainability-linked loans. EQT announced a €2.3 billion ESG-linked credit facility in June 2020 – and then doubled down on the mechanism by striking a similar agreement for €2.7 billion in November the same year.
Carlyle, meanwhile, secured a $4.1 billion credit facility in February 2021 for the firm’s Americas corporate private equity funds. That facility’s pricing was tied exclusively to diversity on portfolio company boards. It is the largest known ESG-linked financing facility for a private equity firm. Carlyle also secured a €2.3 billion facility in September 2021 and a $2.75 billion facility last year.
Other private fund managers with sustainability-linked credit facilities include:
- FSN Capital: June 2021; unknown size, for a €1.8 billion fund.
- AlpInvest: May 2021; unknown size, for a $3.5 billion fund.
- ICG: February 2021; £550 million ($719 million; €643 million).
- Actis: February 2022; $1.2 billion.
- PAG: September 2022; unknown size.
- Triton: December 2021; €1.46 billion.
- Cinven: June 2022; €4 billion.
- Baring Private Equity Asia: October 2021; $3.2 billion.
- Helios: January 2022; unknown size, for a $1.4 billion fund.