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.
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.