EQT procured the largest-ever ESG-linked subscription credit facility from a syndicate of lenders including BNP Paribas and SEB, the firm said. The bridge facility has a current value of €2.3 billion and is capped at €5 billion.
BNP Paribas will serve as agent, sustainability agent and, alongside SEB, sustainability coordinator.
The facility will also be coupled with a pricing mechanism designed to accelerate EQT’s portfolio companies’ ESG performance in areas such as gender equality on the board of directors and renewable energy transition, all supported by a fundamental sustainability governance platform.
EQT will work closely with future portfolio companies to develop customized road maps to deliver on their ESG ambitions with measurable key performance indicators reported quarterly and audited annually. Aggregated results from portfolio companies’ ESG efforts will later be compared with pre-set KPI targets, according to the firm, and the entire portfolio’s average fulfillment rate will impact the line’s interest rate.
In other words, the more ESG progress the portfolio exhibits, the better its eventual financing terms are, the firm said.
The move by one of Sweden’s largest asset managers (ranked eighth in the PEI 300) is another step in the greater fight to create more data and transparency around ESG in private markets.
“The entire financial community faces a challenge in accessing reliable and comparable ESG data – with this ESG-linked financing facility, we actively contribute to increasing the availability of high-quality ESG data, critical for the financial markets to be able to build a resilient and regenerative economy,” said Therése Lennehag, head of sustainability at EQT.
Dutch banking group ING broke onto the scene in October of last year with the world’s first ESG-linked sub-line for Singaporean healthcare investor Quadria Capital.
Lennehag suggested that EQT’s ability to close on the deal amid historic uncertainty is further evidence of the resiliency of sustainable investments.
“We need innovation to accelerate system-wide transformation and it is particularly rewarding that we could launch the SCF despite the challenging marketplace we are currently seeing,” said Lennehag. “It is a strong signal that leading financial institutions are ready to partner with responsible investors and owners to ensure we all optimize for risk, returns and positive real-world outcomes.”