Growthpoint inaugural Green Bond – Africa’s first listing in the JSE Green Bond segment

The challenge

Growthpoint Properties Limited (Growthpoint), was looking for an efficient way to refinance its debt relating to the relatively recent completion of some of its flagship and environmentally-friendly new buildings. The ICMA Principals relating to sustainable finance provided an entity to either finance or refinance qualifying green expenditure through the capital markets.

The best manner to approach this was for the issuer to use more traditional building finance from banks and its own capital as the buildings were being constructed. The issuer then looked to the capital markets to refinance the total expenditure to ensure that the green instrument would have sufficient scale to attract investor participation for the completed buildings.

RMB solution

RMB proposed that Growthpoint leverage its Green Build Council of South Africa (GBCSA) Green Star Ratings to provide assurance to the investor community that the buildings that they were refinancing had adhered to the Green Building Council’s global scorecard for sustainability and efficiency.

All buildings included in the refinance were rated four stars or higher. This was socialised with the investor community on a multi-day deal roadshow in Cape Town and Johannesburg. This was followed by the financing of a triple-tranche transaction that gave investors a menu to access medium and long-dated credit in the issuer. The company’s auditor verified that the funds had been appropriately applied to refinance the corresponding related building expenditure.

Client benefit

The client was able to access new pools of liquidity, driving up the order book compared to a conventional bond. Growthpoint was able to issue a 10-year instrument – its longest public issuance at the time. More than 50% of the funding was in the 10-year instrument, pushing out the company’s debt maturity profile. The client now has an established Sustainability Finance Framework from which to fund new debt raising going forward.