Celebrating the listing on Friday of Africa’s first Nature-Linked Performance-Based Bond, the R2.5 billion FirstRand Bank Cape Water Performance-Based Bond.
Image: Supplied
The Johannesburg Stock Exchange (JSE) marked a milestone in sustainable financing with the listing on Friday of Africa’s first Nature-Linked Performance-Based Bond, the R2.5 billion FirstRand Bank Cape Water Performance-Based Bond.
The bond is part of a broader transaction structure that supports The Nature Conservancy (TNC) South Africa, a nonprofit organisation with established conservation programs, in delivering a project that restores priority water catchment areas by removing invasive plant species, thereby increasing water flows into storage dams.
The R2.5bn issuance links part of investors’ returns to independently verified ecological restoration. It marks a big advance in the role capital markets play to support nature and water security.
Bhulesh Singh, FirstRand Group Treasurer, said the innovative bond was part of the broader Cape water invasive plant removal project transaction structure.
“One of our key objectives was to make nature an investable asset class and build a natural capital market in South Africa that accommodates diverse participants, crowding in new pools of both local and international investors, alongside additional outcomes-based funders, and aligning the interests of all stakeholders in the value chain,” said Singh.
The FirstRand group's corporate and investment bank, RMB, was instrumental in structuring and executing the transaction, and the FirstRand Foundation also played a role as an anchor outcomes-based funder and coordinator for other philanthropic partners.
“This bond represents another milestone in the longstanding partnership between FirstRand and the IFC (International Finance Corporation). The IFC’s investment was essential to achieve the target bond size, enabling the overall transaction,” said Singh.
The group also collaborated with FSD Africa, an African development finance institution, in their first South African listed debt capital markets investment.
“Strong support and early commitment from Aluwani Capital Partners, a South African asset manager, also enabled the successful conclusion of the book build,” said Singh.
JSE Head of Trading, Helina Andhee, said: “Linking part of investors’ returns to independently verified ecological outcomes shows how listed instruments can be used to finance nature-based solutions. This bond illustrates how capital markets can align financial performance with measurable environmental impact.”
“By listing this bond, the JSE offers investors a market-based mechanism to support an environmental project that mitigates climate-related water risk while aligning returns with long-term water security outcomes,” she said.
Strategic Water Source Areas (SWSA) make up about 10% of South Africa’s land but supply 60% of its water and support two-thirds of its economic activity. “This shows why ongoing investment in these areas is so important,” she said.
Among the coalition of local and international investors and philanthropic funders that anticipated were also other South African asset managers and pension funds.
Visit:www.businessreport.co.za