Stocholm (NordSIP) – Regulatory and industry initiatives certifying the environmental credentials of investments are one of the main tools aiding sustainable investors find their way through the multitude of green-labelled fixed-income securities available in the market.
Launched in April 2023, the Climate Bonds Initiative (CBI) published the fourth iteration of its Climate Bonds Standard Use of Proceeds Certification for this precise purpose. The Climate Bonds Standard Version 4.0 (CBS v4.0) expanded the Climate Bonds Standard and Certification Scheme to allow for the certification of non-financial corporates (i.e., Corporates providing goods and services in the real economy), assets and sustainability-linked debt instruments.
A New Record
On July 4th, taking advantage of this updated standard, QIC Infrastructure, on behalf of its managed funds and clients (QIC), together with Vector Limited (Vector), successfully financed an AUD$1.6 billion green loan for Vector Metering, a smart metering business. This is the first Use of Proceeds Certification globally under the new CBS v4.0 and is the largest Climate Bonds Certified green bank loan aligned with the Climate Bonds’ Electrical Grids and Storage eligibility criteria.
Vector is a listed New Zealand energy company, delivering energy and communication services to more than 600,000 residential and commercial customers across New Zealand and the Pacific. Vector is majority owned by Entrust, a private trust. QIC is an Australian investment manager and adviser focused on alternative real asset solutions across infrastructure, real estate, private debt, private capital, natural capital for 125 clients, with AUD$100 billion in assets under management. QIC Infrastructure manages in excess of AUD$29.9 billion across 23 international direct investments and has realised in excess of A$15.0bn back to its clients.
The new Vector Metering group is a leading smart metering business owned by Vector and QIC, which provides innovative smart meter data services from more than two million electricity and gas meters throughout New Zealand and Australia.
“By ensuring Vector Metering’s financing meets the rigorous requirements of Climate Bonds Standard Version 4.0, QIC and Vector have demonstrated their dedication to global best practice in climate finance. This milestone underscores the importance of transparent and credible certification in mobilising capital for climate-aligned investments and demonstrates a real economy example of transition of energy systems,” said Sean Kidney, CEO, Climate Bonds Initiative.
The Transaction
The green loan was issued under Vector Metering’s Green Financing Framework, which was developed in line with the February 2023 update to the Green Loan Principles (the Principles). The proceeds from this loan will go to fund QIC’s 50% interest in Vector Metering and to green capex facilities to fund the business’ ongoing electricity smart metering expansion across Australia and New Zealand.
Ross Israel, Head of Global Infrastructure, QIC was pleased that this acquisition could be funded by green financing. “Smart meters have a critical role to play in the decarbonisation of electricity supply in both Australia and New Zealand. Their role is rapidly evolving from data processing for timely billing purposes, to being an enabler for electricity networks to manage an ever-increasing volume and volatility of electricity supply due to the broader energy transition and increasing penetration of renewable generation,” Israel said. “This investment, together with the green financing instrument we have secured, is another demonstration of QIC Infrastructure’s commitment to supporting the transition to a low-carbon economy,” Israel added.
This green loan attracted extensive interest. JP Morgan acted as financial advisor on the transaction, with Herbert Smith Freehills and Russell McVeagh acting as borrower’s counsel and Corrs Chambers Westgarth and Bell Gully acting as lenders’ counsel. MUFG Bank Ltd, National Australia Bank Limited, Westpac Banking Corporation and Westpac New Zealand acted as joint sustainability coordinators on the transaction.
