RBS International (RBSI) has recently agreed to support private equity firm EQT by participating in its latest buyout fund’s subscription credit facility. According to RBSI, this represents the first ESG-linked fund-level facility of this size in the global fund financing market.
Funded by a syndicate of lenders, the facility includes an ESG pricing mechanism and is designed to incentivise the performance of the fund’s portfolio companies in improving their ESG performance.
RBSI has a history of providing fund-level credit facilities to the alternative investment funds, having been an active lender through its Channel Islands teams over the last 20 years. During that time, the bank’s Institutional Banking team has assisted a number of EQT’s funds with their financing needs and this relationship meant RBSI remained a natural partner to be included within the group of participating lenders involved in this facility.
Jean-Paul Peters, Head of RBSI's Funds Banking team in Guernsey said: “As part of the bank’s commitment to be an agent of positive change within our society and to actively champion climate solutions in particular, this deal represents a landmark moment for both our business and the fund financing market as a whole. ESG is high on our agenda and, by working with EQT and other like-minded banks on this transaction, we have proven that ESG is a fundamental part of our lending strategy and not just reserved to-specific asset classes.
“The team, led by Paul Milsted with the support of colleagues from the loan markets team in NatWest Group, led by Kim Slater, worked tremendously hard to complete the transaction against a fairly challenging deadline in the midst of the lockdown measures in force due to the Covid-19 pandemic. This is an important milestone in the industry’s efforts to make sustainable financing more mainstream and I am confident that we will see more focus on such responsible lending in the future.”
Per Franzén, Partner and Co-Head of the EQT Private Equity Advisory Team, added: “This is a game changing moment for EQT but also the private equity industry, further evidencing how our industry also can benefit from sustainable financing. For us, ESG plays a crucial role in how EQT future-proofs companies and with an ESG-linked bridge facility, we bring a new dimension to EQT’s value creation process. By linking sustainability objectives to hard incentives, we are really challenging ourselves and the portfolio companies to fully embrace the potential of sustainability - it’s really quite simple, sustainable business is good business and creates better value for all stakeholders.”
