Hospital operator Mediclinic has refinanced its existing debt through a new R8.45-billion sustainability-linked banking facility – the first of its kind arranged by a bank in Africa.
Rand Merchant Bank (RMB), a division of FirstRand Bank, acted as the lead arranger for the transaction.
By achieving pre-agreed sustainability performance targets, Mediclinic will benefit from a reduced facility margin through an incentive-based pricing mechanism. The targets are directly linked to key group environmental and social (E&S) goals.
By financially incentivising the achievement of these E&S targets, companies in Africa can now align their business goals with sustainability targets, RMB said in the statement on Tuesday.
“This pioneering development allows RMB to deploy its balance sheet in a way that drives environmental, social and governance outcomes within its broader business universe, delivering sustainable investment and growth in Africa while also making the continent relevant to a broader global investment universe,” stated RMB head of sustainable finance and ESG advisory Nigel Beck.
RMB aligned the funding to Mediclinic’s ambitious sustainability goals of carbon neutrality and zero waste to landfill by 2030.
Going beyond business as usual such as setting sustainability targets related to reduction in Scope 1 and 2 carbon dioxide emissions and waste diverted from landfill, also included a reduction in Mediclinic’s use of water resources and improvement in patient experience.
Mediclinic’s progress towards agreed E&S goals will be independently assessed and measured every year.
Mediclinic International group CFO Jurgens Myburgh said that the innovative funding mechanism would align the group’s financial and sustainability goals.
The new facility comprises R7.95-billion in senior secured debt and a R500-million revolving credit facility, replacing previous facilities, Mediclinic stated.