Bank partners with investment company PAG on landmark deal
ANZ has help facilitate the largest sustainability-linked credit facility for a private credit fund in the Asia Pacific.
The bank announced its role as join sustainability coordinator for funds managed by PAG's private debt strategy. The hallmark feature of this facility lies in its integration of sustainability performance with the interest rate margin.
“ANZ is thrilled to support PAG on this milestone transaction,” said ANZ head of financial sponsors Asia Niamh Targett. “Its unique structure enables deep engagement with borrowers to achieve improved sustainability outcomes while also aligning with our sustainable solution strategy.”
“We see significant appetite for innovative solutions delivering successful investment outcomes to investors, while making a positive impact on the broader community. We look forward to continued partnerships with market leaders such as PAG.”
ANZ has a good track record in this area – in May 2022 it was named best bank for environmental, social and governance and sustainable finance at the annual Australian Corporate Treasury Association (ACTA) awards.
PAG is a leading alternative investment firm focused on the Asia Pacific. Its sustainability-linked subscription line credit facility operates based on four key performance indicators, which serve as benchmarks for the fund's sustainability performance.
Consistent achievement of these indicators triggers a reduction in the total interest paid over the term of the facility. Conversely, failure to meet these benchmarks would result in an increase in total interest.
“Positive ESG impact drives long-term value for our investors and is an integral part of our culture and investment process,” said PAG partner and co-head of private debt Anshumann Woodhull. “This landmark sustainability-linked facility is the latest example of how our focus on ESG directly translates into enhanced returns for our investors.”
ANZ took charge as Joint Sustainability Coordinator, spearheading the development of a sustainability-linked finance framework in adherence to global standards and market best practices.
This framework outlines guidelines for PAG's private credit funds to incorporate sustainability-linked attributes into their financing activities. The alignment of this framework with the Loan Market Association Sustainability-Linked Loan Principles was confirmed by a second party opinion issued by ISS Corporate Solutions.
“We hope this transaction will serve as a blueprint in the private debt market of how ESG impact objectives can be advanced by integrating sustainability linked features in such facilities,” said ANZ director sustainable finance Mara Chiorean.
“The structure has an innovative mechanism to drive improvement in sustainability performance for PAG’s private credit portfolio companies using the full toolbox at their disposal, from ESG integration in due diligence and climate related contract clauses to ESG training. This is meaningful as private credit portfolios can make ESG stewardship and oversight more challenging.”
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