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Nordic Capital secures ESG-linked facility

by Alice Murray 26 May 2021

Nordic Capital has secured its first credit facility linked to ESG targets.

The revolving facility is linked to Nordic Capital Fund X, which closed on €6.1bn in October 2020, and is subject to specific ESG targets.

Nordea acted as sustainability coordinator and Citi as arranger. The facility is aligned with the sustainability linked loan principles, published by the LMA, APLMA and LSTA.

The GP has identified maternal sustainability KPIs and targets in line with the UN Sustainable Development Goals. The credit facility incentivises strong performance against these KPIs, which covers the material ESG areas where Nordic Capital has a direct impact, both at the GP and portfolio level. KPIs include reducing carbon footprint, improving gender equality at board level and demonstrating strong governance.

A penalty / reward mechanism is built into the ESG-linked loan, whereby fairly to uphold a top tier UNPRI scoring on ESG performance in the annual assessment will increase the cost of repayments. Conversely, achieving targets reduces the cost of the facility.

Elin Ljung, director of communication and sustainability, and Nordic Capital Advisors, commented, “This first ESG-linked credit facility marks an important milestone in the delivery of Nordic Capital’s responsible investment strategy. The targets have been calibrated to demonstrate and encourage an ambitious and industry-leading approach to sustainability in portfolio companies, directly addressing important areas that impact the world we live in. Sustainability lies at the heart of Nordic Capital and it is great to be working with banking partners to drive ESG ambitions forward.”

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