Africa’s Standard Bank Arranges $306 Million ESG Loan for Grit
- Standard arranges largest African sustainability linked deal
- Grit’s debt refinancing targets include gender equality
Grit Real Estate Income Group Ltd. is raising as much as $306 million in a sustainability linked debt deal arranged by Standard Bank Group Ltd. and other South African lenders.
The term loan and revolving credit facility that is linked to Grit’s ESG, carbon-emissions reduction and gender-equality targets is the largest real-estate industry transaction to date in sub-Saharan Africa, excluding South Africa, the company said in a statement on Wednesday. The money will be used to replace $279.1 million of Grit’s debt, and secure funding for a Club Med redevelopment project in Senegal, it said.
“By refinancing almost all of our existing debt exposures into a single sustainability linked facility, we are streamlining our loan management process and bolstering our commitment to our ESG targets, including carbon-emission reduction and gender equality,” Grit Chief Executive Officer Bronwyn Knight said.
The issuance of sustainability linked debt is booming worldwide, and African companies like Grit are increasingly making use of potential rewards such as better pricing linked to the loans. Banks usually offer borrowers discounts on lending if they meet targets for tackling issues ranging from reducing pollution to assisting job seekers. Companies unable to meet commitments are penalized.
See related article: OMFIF: More African Countries Implementing ESG Finance Policies
Global issuance of loans linked to borrowers’ environmental, social and governance performance surged to almost $500 billion in 2021 from $4.9 billion in 2017.
Similar deals this year elsewhere in the world include Spanish phone company Telefonica SA amending its core debt facility to commit to lower carbon emissions and more women in executive roles. Turkish lender Akbank TAS raised a $660 million loan with pricing tied to the amount of renewable energy it sourced and the number of expiring plastic cards it replaced with recycled ones.
The transaction is expected to be finalized by the end of October and is supported by Standard Bank, Absa Group Ltd. and Nedbank Group Ltd. It will cover the company’s assets and debt facilities on a corporate level, and in Mozambique, Ghana, Zambia and Senegal.