Aug 16, 2022 | Weingarten
CHG-MERIDIAN continues to pursue its strategy of using sustainability-oriented funding instruments for corporate finance purposes. The technology management and financing company, which managed a technology portfolio worth €7.8 billion in 2021, raised €200 million in funding through ESG-linked funding instruments in the second and third quarters of 2022.
The new funding volume was raised in equal parts from the first placement of a bonded loan with an ESG component (€100 million, arranged by Landesbank Baden-Württemberg) and from an additional syndicated loan (€100 million) from a group of savings banks led by Helaba Landesbank Hessen-Thüringen. The maturity periods of these funding instruments range from four to six years. The interest rate is pegged to CHG-MERIDIAN’s EcoVadis rating, which means that the more sustainably the business is operated, the lower the financing costs will be.
Not long ago, in December 2021, CHG-MERIDIAN agreed its first ESG-linked syndicated loan with Helaba Landesbank Hessen-Thüringen. Thanks to CHG-MERIDIAN’s excellent credit rating, global presence, and highly popular business model inspired by the principles of the circular economy, the most recent transaction also attracted a lot of demand and was brought to market very swiftly. All in all, 27 savings banks are involved in this financing arrangement.
Ulrich Bergmann, the CHG-MERIDIAN Board of Management member with responsibility for finance, is not surprised:
“Global demand for sustainable finance remains very strong. But a recent study* showed that placements of these types of financial product have declined by around 7.5 percent year on year. Banks and lenders want companies to be transparent about how, and to what extent, they are addressing ESG topics. The EcoVadis rating serves as evidence of our ESG credentials and enables us to obtain sustainable funding for our future growth at attractive conditions.”
The Group currently holds a silver rating, which means that it ranks among the top 25 percent of all companies assessed by EcoVadis.
In addition to the aforementioned syndicated loan, CHG-MERIDIAN raised a further €100 million by way of a recent bonded loan placement. It is the first time that the Company has structured this type of loan with an ESG component. The loan was arranged by Landesbank Baden-Württemberg.
“Both financing transactions constitute progress on our journey toward the goal of raising half of our growth-related funding by means of sustainability-oriented financing solutions,” says Bergmann. This benefits everyone: “Sustainability is a central pillar of our corporate strategy. We therefore have our ESG activities independently assessed. This enables us to harness our success in this field to issue funding instruments in the capital markets that are linked to our ESG performance. We monitor the market and potential financing concepts on an ongoing basis in order to ensure a healthy volume of funding and a good level of diversification. The provision of these new financing solutions, and their volume, are proof that the capital markets have great confidence in CHG-MERIDIAN’s creditworthiness and sustainability credentials.”
The sustainable transformation of the economy is a global challenge: high time for companies, their CEOs and CFOs to change their perspective and use more and more sustainable financial instruments.