Motus, a large South African non-manufacturing automotive group, has closed a £120 million three-year sustainability-linked loan (SLL), the interest rate on the loan being linked to the attainment of fuel and water consumption targets. As with other sustainable loan mechanisms, the borrower will incur a cost-of-debt penalty should these agreed targets not be met.
Motus's £120 million sustainability-linked loan builds on its landmark 2019 transaction – highlighting the ongoing rapid growth of ESG financing.
With a market capitalisation of ZAR 15.75 billion (c. $1 billion), this is the firm's second SLL following its £30 million debut in March 2019, with BNP Paribas acting as sustainability coordinator.
The loan further underscores the depth and breadth of market interest in how sustainable finance can give investors and borrowers the tools to achieve their environmental, social and governance (ESG) goals.
"We are pleased to be able to work with banks who have provided this innovative facility that allows Motus to leverage its efforts in ESG," says Osman Arbee, Motus CEO. "We remain mindful of the economic, environmental and social consequences of our activities and actively strive to uphold our commitment to all stakeholders."
BNP Paribas Group South Africa CEO Vikas Khandelwal explains that by structuring financing products that provide incentives to companies to achieve their sustainability targets, banks can do their bit to promote the implementation of the United Nations Sustainable Development Goals (SDGs). "That we are able to introduce this innovative loan structure to a company in South Africa speaks volumes of the efforts investors and borrowers worldwide are making to mitigate risks and embed a working ESG framework," he says.