EQT scores an ESG landmark in a difficult market

EQT, the Swedish asset manager, has closed the largest-ever ESG-linked subscription credit facility, reports Connor Hussey. This is a novel development on several fronts.

Firstly, it closed amid all the current market chaos, perhaps indicating growing acceptance of the notion that sustainable portfolios outperform traditional ones.

The second notable thing is that, anecdotally, new lending in subscription finance has slowed as lenders focus on existing clients, and syndications are also harder to place. It depends on who you ask, and some borrowers are clearly having a swimmingly easy time of getting large-scale fund financing. Yet some blue chip sponsors have definitely been turned down by relationship lenders or had difficulty getting the sizes they want. This is all stuff we examine in an upcoming feature that will be out soon, but the point is: good for EQT!

Thirdly, these lines are increasingly in style these days. Standard Chartered closed an €80 million line with “one of the world’s largest private markets investment managers” for investments that align with the UN’s Sustainable Development Goals, its first of this kind. It follows in the footsteps of Dutch bank ING, which closed a $65 million three-year revolving facility linked to sustainability criteria with Quadria Capital in October. And in January European investor Eurazeo secured a €1.5 billion credit facility “indexed against ESG performance criteria”.

Email prepared by Graham Bippart and Isobel Markham