Standard Chartered Bank and Bank of America have taken advice from the Magic Circle and a Turkish law firm on arranging an environmental, social, governance (ESG)-connected syndicated loan facility.
Allen & Overy and Gedik & Eraksoy advised the two banks on structuring the financing, for the benefit of Turkish financial services company Garanti BBVA.
Listed on the Borsa Istanbul Stock Exchange, Garanti is partially owned by Spanish bank Banco Bilbao Vizcaya Argentaria, which owns 49.85% of the shares in the Turkish company, and is listed publicly on the London Stock Exchange.
The financial support facility agreement contains a sustainability-linked margin that will change according to how Garanti performs up against an array of environmental and sustainability factors.
The sustainability target-driven financing makes this first of its kind in Turkey, and the first ever to be made available to a bank.
“The strong appetite among lenders saw 28 of them across 13 countries join the facility and is testament to the growing importance of sustainability in the financial markets; a trend we expect to continue, both in Turkey and globally,” explained an Allen & Overy counsel in Istanbul, Adam Fadian, in a statement.
Allen & Overy, which employed international expertise across London, Istanbul and Johannesburg to advise the banks, recently published a report, Environmental, Social and Governance, Managing risks and enhancing value, in which the company stated that “a growing body of empirical evidence shows that sustainable investment goals can be aligned with – and can advance – financial objectives”.
It continued: “It is now common ground that investors’ duties around the world not only permit, but increasingly require investors to embed ESG factors into investment processes. New regulatory risks also are emerging for investors and financial institutions, as governments respond to the international commitments States have made to address adverse ESG impacts – including with respect to climate change.”
The importance of sustainability has gained traction in recent times, leading to increased activity in the mergers and acquisitions space, with firms like Solaque Holding selling off wind farms to others, in this case, Finland fund management firm, Taaleri.