ING has closed what may be the first sustainability-improvement capital-call facility for Singapore-based private equity fund Quadria Capital Fund II, with the interest rate pegged to the fund’s sustainability performance.
The US$65 million three-year revolving sustainability-tied facility compares with a global fund finance industry alternative-asset-industry data provider Prequin estimates at US$400 billion. The facility will peg the interest rate to a set of environmental, social and governance (ESG) targets on the fund’s investee companies and portfolio, and afterward the rate will be linked to ESG improvement.
The ESG metrics are provided by data platform B Analytics and will also use Quadria’s own ESG framework, which follows the United Nations’ Principles for Responsible Investment (PRI), and an independent materiality assessment.
“As a bank we aim to promote socially responsible behavior in the funds and fund managers we finance, so that we may influence ESG improvement in portfolio companies by incentivising their shareholders,” Herry Cho, ING’s head of sustainable finance in Asia.
Quadria Capital Management, a private-equity sponsor focusing on the healthcare sector in developing Asia, has raised most of the US$500 million Quadria Capital Fund II, which is expected to close by year-end.
In 2017, ING was the first financial institution globally to launch the concept of a sustainable loan when it collaborated with Royal Philips on a one billion euro (S$1.51 billion) syndicated loan that had the interest rate coupled to sustainability performance and rating.
ING also has closed four sustainability improvement loan facilities in Asia so far, including with Wilmar International. It has closed 66 such deals globally.