GLP Pte. Ltd. is a leading global investment manager and business builder in logistics, real estate, infrastructure, finance and related technologies. Operating across Brazil, China, Europe, India, Japan, the US and Vietnam, GLP has over US$120bn in assets under management through direct investment and asset management funds.
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In 2020 GLP sought to raise additional capital to develop and acquire eco-friendly logistic warehouses.
Raising funds in the ESG space has its own challenges. The underlying assets of the financing should be aligned with the lenders as sustainable and green, and fit within investors’ long-term vision or corporate strategy. In addition, structuring key performance indicator (KPI) related criteria or covenants need to align with GLP’s long-term sustainability targets. The ESG ratings of GLP should also be transparent, measurable and assessed independently. GLP also needed to commit resources to develop a Green Finance Framework which covers its green bonds and green and sustainability-linked loans.
GLP launched its Green Finance Framework in November 2020 with the objective of integrating sustainable development and action against climate change mitigation, in line with the company’s strategy and ESG Policy.
As a strong statement of GLP’s ongoing commitment to sustainability, GLP closed its inaugural sustainability-linked loan (SLL) of US$658m with participation from ten banks in February 2021. The loan is one of the largest SLLs in Asia and GLP will use the loan proceeds to contribute to environmental objectives related to climate change mitigation and the promotion of green buildings.
The three-year revolving credit facility (RCF) is structured as a SLL tied to GLP’s latest Sustainalytics ESG Risk Rating. Under the facility, GLP is committed to improving its ESG Risk Rating which reflects GLP’s performance in various ESG metrics. The RCF features a two-tier incentive mechanism where GLP will be entitled to an interest rate reduction when targeted improvements, such as green building investment, sustainable products and service are achieved. Factors such as corporate governance, human capital, and product governance are assessed for their ESG performance.
The US$658m facility was later further upsized to US$718m with two more banks.
Following the successful SLL issuance, GLP issued a US$850m perpetual non-call five-year bond, which marked a milestone for the firm as it is the first APAC corporate issuer to launch US dollar green subordinated perpetual offering and the issuance represented the largest US dollar green subordinated perpetual bond globally.
The green bond also marked GLP’s return to the public US dollar international markets, six years after their last issuance in 2015. It was highly successful, with a final orderbook of more than 6x oversubscribed based on the initial target size of US$500m, ultimately enabling GLP to upsize the transaction to US$850m.
Best practice and innovation
The treasurer is aware that with a team of just four, it is extremely challenging to have two major projects ongoing at the same time in addition to other ongoing projects. The treasurer eventually devised a two-person team to handle each project from end-to-end, providing the necessary cover between the two people to continue the implementation. The notable part of the entire journey is that GLP’s treasurer is forward-looking and motivates his team to adopt future-proof connectivity with the partner bank, Citi, while having to work from home during most of 2020.
- Group’s balance sheet improved.
- Sustainable solution.
- Interest reductions upon achievement of