PE fund Quadria Capital secures ING financing tied to sustainability performance

The $89.08m three-year revolving facility will peg its interest rate to ESG targets.

Private equity (PE) sponsor Quadria Capital has secured the world’s first sustainability capital call facility from Dutch financial services company ING, where the interest rate would be pegged to the sustainability performance of the fund.

According to a press release, the $89.08m three-year revolving facility is the first of its kind in the global fund finance industry that is estimated to be worth $548.16b (US$400b).

Quadria Capital Management is a Singapore-based PE firm focused on the healthcare sector in Asia. The facility is part of the firm’s $685.2m (US$500m) Quadria Capital Fund II. The fund is expected to close by end-2019.

Quadria’s facility will peg the interest rate to a set of environmental, social and governance (ESG) performance targets on its Fund II investee companies and investment portfolio.

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Accordingly, the set of ESG metrics is based on key performance indicators provided by data platform B Analytics and further mapped to Quadria’s own internal ESG framework which follows the United Nations’ Principles for Responsible Investment (PRI).

Performance of the fund against these metrics will be assessed annually by B Analytics and if predetermined targets are met, the interest rate will be reduced in the following year, the release added.

ING first launched the concept of a sustainable loan in 2017 with its collaboration with Royal Philips on a $1.51b (€1b) syndicated loan that had the interest rate coupled to sustainability performance and rating.

That same year, ING converted part of Wilmar International’s $150m existing revolving credit facility into a sustainability improvement loan (SIL). ING said that it has closed four SILs so far in Asia and 66 SILs worldwide.

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Herry Cho, ING’s Head of Sustainable Finance in Asia said that ESG criteria is rapidly becoming a key consideration for mainstream global institutional investors and asset owners allocating money into private capital. “Of the UN PRI signatories’ $123.34t (US$90t) AUM globally, private capital currently accounts for only 6%. Therefore, the potential for private capital to become more ESG focused is quite significant,” she said.