Temasek-backed ABC Impact has introduced a $110 million sustainability-linked loan facility jointly established with DBS and UOB, according to an announcement.
The loan, converted from an existing conventional subscription loan, is for ABC Impact Fund II, which closed at more than $600 million earlier this year.
Under the loan’s terms, the fund’s portfolio companies will be required to achieve sustainability performance targets related to avoided or reduced greenhouse gas emissions, as well as the number of beneficiaries reached across key impact sectors such as agriculture, healthcare, education and financial services, ABC Impact said.
Fund II will focus on investments in clean energy, decarbonisation technologies, and sustainable infrastructure, in addition to healthcare and financial inclusion. It has already backed companies such as Japanese solar company Tekoma Energy; Aye Finance, a micro-finance lender, DCDC Kidney Care, one of the largest dialysis networks in India; and Winnow, a UK-based food waste reduction business. ABC Impact most recently acquired a 16% minority stake in AC Health, the healthcare arm of the Philippines’ oldest conglomerate, Ayala Corp.
ABC Impact, along with DBS and UOB, will channel capital flows towards projects with meaningful outcomes while embedding a focus on measurable impact and disclosure into the financing structure.
“With our investors’ capital already fully dedicated to impact, and now our financing linked to measurable sustainability outcomes, every dollar we manage is aligned with our mission,” said the firm’s Chief Impact Officer Sugandhi Matta.
Simon Ong, Group Head of Financial Institutions and Government-Linked Corporations at DBS, added: “This partnership demonstrates financial innovation in action – taking a traditional product and reimagining it to better serve the ecosystem. […] This is an example of how banks can act as enablers of sustainable and impactful development, steering capital towards solutions that improve lives and livelihoods.”
DBS’ sustainability-linked transactions include China Resources Group’s CR Micro, CITIC Metal, Haier, and Fortune REIT, among others.
Meanwhile, UOB recently provided sustainability financing for Seatrium Financial Services and IHH Healthcare. Last year, the bank partnered with Enterprise Singapore to launch the Sustainability-Linked Advisory, Grants and Enablers (SAGE) Programme for the region’s small and medium businesses.
Sustainability-linked loans are getting more mainstream across Southeast Asia. For example, the Asian Development Bank, which is also a limited partner in ABC Impact Fund II, provided a $150-million loan for Vietnam-based Vinschool. International Finance Corporation is also helping Indonesian retail and logistics property platform PT Nirvana Wastu Pratama expand its green buildings with the same structure.
