QIC has successfully converted a subscription finance facility for one of its Infrastructure funds into a US$300 million Sustainability Linked Loan (SLL) – understood to be one of a first of its kind for an Australian manager.
QIC Infrastructure, which aims to primarily invest in the transport, energy/utilities, and social/healthcare sectors, will utilise three key performance indicators (KPIs) for the SLL. With an additional stretch target, it demonstrates QIC’s commitment to setting a robust and ambitious structure.
The KPIs linked to the Sustainability Linked facility’s interest rate margin are:
- Science Based Targets initiative (SBTi) validation for portfolio companies
- Gender diversity
- GRESB rating, and
- Stretch targets demonstrating reduction in greenhouse gas emissions for portfolio companies with SBTi validated targets.
The chosen targets demonstrate QIC Infrastructure’s strong focus on sustainability commitments. Each of the targets have been structured to align with one of QIC Infrastructure’s sustainability focus areas – climate resilience, people and culture and risk and governance.
QIC Head of Global Infrastructure, Ross Israel said converting this loan to a Sustainability Linked Loan aligns with QIC’s thematic investment philosophy.
“We are focused on delivering attractive risk-adjusted returns and demonstrable social and environmental benefits for people and communities. We believe sustainability presents generational investment opportunities, and in our role as an asset manager, we have the distinct privilege of helping to meet society’s needs by responsibly delivering and building resilient infrastructure,” Mr Israel said.
“The significant investment in infrastructure we see coming is being driven by the key megatrends of decarbonisation, digitalisation and deglobalisation.”
MUFG Bank Ltd and ANZ Bank acted as joint sustainability coordinators on the transaction.
A Second Party Opinion was procured from DNV Business Assurance, confirming the loan was issued in alignment with the Sustainability Linked Loan Principles 20231 and demonstrated the ambitiousness of the chosen sustainability performance targets.
Rob Ward, Head of Asian Investment Banking Division, MUFG Bank, Oceania, congratulated QIC on the milestone achievement and for its alignment of financing and sustainability strategies.
"This transaction demonstrates QIC’s commitment to sustainability, as evidenced by the ambitious targets implemented within the financing structure. As joint sustainability coordinator in this process, it also reaffirms MUFG’s well-known capabilities of assisting our key clients to structure sustainable finance solutions across the debt spectrum,” said Mr Ward.
David Simmons, Executive Director Sustainable Finance at ANZ, said ANZ was pleased to support QIC in the integration of the sustainability targets in their financing arrangements, in their role as joint sustainability coordinator.
“This Sustainability Linked Loan has been structured to help set companies, acquired by QIC Infrastructure, on an ambitious pathway to greenhouse gas emissions reductions and improved diversity in the boardroom,” Mr Simmons said.
“In addition, adoption of GRESB Infrastructure ratings will provide important benchmarking to enable targeted improvement initiatives across a broad range of ESG aspects.”
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Citations
- Issued by the Asia Pacific Loan Market Association, Loan Markets Association and Loan Syndications & Trading Association
