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Mediclinic recipient of Africa’s first sustainability linked loan
Mediclinic is now the recipient of what is called a sustainability-linked loan which was structured by a team at RMB. It's worth 8.45 billion rand and its tied to per-determined performance targets that the hospital operator must meet. Joining CNBC Africa for more is Nigel Beck, Head of Sustainable Finance and ESG Advisory at RMB.
Tue, 21 Sep 2021 15:35:44 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The sustainability-linked loan received by Mediclinic from RMB is a pioneering venture in the African financial market, setting a new standard for ESG-aligned financing solutions.
- The loan structure involves establishing performance targets tied to Mediclinic's ESG strategy, focusing on areas such as carbon neutrality, water efficiency, waste reduction, and patient experience.
- As more corporations show interest in sustainable finance products globally, the South African market is witnessing a surge in demand for initiatives like green bonds, social bonds, and sustainability-linked loans.
Mediclinic, a leading hospital operator, has recently become the recipient of what is known as a sustainability-linked loan, valued at 8.45 billion rand. This groundbreaking loan was structured by a team at Rand Merchant Bank (RMB) and is tied to predetermined performance targets that Mediclinic must meet in the realm of environmental, social, and governance (ESG) initiatives. Nigel Beck, the Head of Sustainable Finance and ESG Advisory at RMB, provided insights into the technical aspects of this innovative deal during an interview with CNBC Africa.
The loan, which is considered the first syndicated sustainability-linked loan arranged by an African bank, marks a significant milestone in the financial landscape. Beck emphasized that the quantum of this loan is approximately four times larger than previous bilateral sustainability-linked facilities in the market, making it a pioneering initiative in the region.
The structure of the sustainability-linked loan revolves around aligning with Mediclinic's ESG strategy, which includes goals such as achieving carbon neutrality by 2030, enhancing water efficiency, minimizing waste, and improving the overall patient experience. Specific metrics have been developed for each of these objectives, with baseline measurements established in consultation with the client. The loan incorporates two target dates - the end of 2022 and 2023 - with pricing benefits or penalties based on Mediclinic's ability to meet these targets.
Beck elaborated on the pricing mechanism of the loan, explaining that it is designed to incentivize Mediclinic to achieve its sustainability goals effectively. The pricing ratchet will adjust according to the key performance indicators (KPIs) set for carbon neutrality, water efficiency, waste diversion, and patient satisfaction, reflecting the credibility and ambition of Mediclinic's sustainability strategy.
While the structuring and closure of the deal presented its challenges, particularly in coordinating efforts with multiple banks, Beck highlighted the benefits of collaboration among stakeholders. As more companies show interest in sustainable finance products, RMB is witnessing a growing corporate appetite for initiatives such as green bonds, social bonds, and sustainability-linked loans. The market for sustainable finance has been experiencing substantial growth globally, with South Africa also beginning to embrace these instruments to align financial strategies with sustainability objectives.
Looking ahead, Beck noted that as more companies pursue sustainability-linked financing options, the process is expected to become more streamlined and efficient. By blending sustainability goals with financial strategies, corporations like Mediclinic are not only driving positive environmental and social impact but also enhancing their long-term financial performance.
In conclusion, the reception of Africa’s first sustainability-linked loan by Mediclinic underscores the evolving landscape of sustainable finance in the region. The partnership between RMB and Mediclinic signifies a step towards aligning business objectives with sustainable practices, paving the way for more companies to embrace ESG principles in their financial endeavors.
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