46027 - Nedbank Green Bond DCM

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Summary of Investment Information

Project Number

46027

Company Name

NEDBANK LTD

Date SPI Disclosed

Dec 10, 2021

Country

South Africa

Region

Africa

Projected Board Date

Nov 30, 2021

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Sep 30, 2022

Department

Regional Industry - FIG Africa

Industry

Financial Markets

Previous Events

Approved : Nov 30, 2021
Signed : Dec 3, 2021
Invested : Dec 10, 2021

Sector

Commercial Banking - Housing Finance

Additional Project Attributes

Blended Finance

Project Description

The proposed investment consists of an IFC anchor investment of ZAR500 million in a 7-year ZAR 1.090 billion privately placed senior unsecured green bond issuance by Nedbank Limited (“Nedbank” or the “Bank”). The bond will be issued under the Bank’s ZAR75,000,000 Domestic Medium Term Note Programme dated February 8, 2019, will be certified to confirm alignment with the International Capital Market Association Green Bond Principles, and listed on the Johannesburg Stock Exchange (the “Project”). The proceeds of the bond will be fully dedicated to financing Excellence in Design for Greater Efficiencies (“EDGE”)-certified green residential housing developments in South Africa, up to 75% of which are anticipated to be in the affordable housing segment, on a reasonable-efforts basis.

Associated Advisory Engagement

IFC will explore providing a customized Advisory Service (“AS”) program to Nedbank on the EDGE tool and certification, including: (i) capacity building for Nedbank's appraisers, loan officers, and internal team; (ii) capacity building for Nedbank’s residential construction stakeholders (consultants, architects, or developers); and (iii) input for Nedbank’s product development and marketing, as needed.

The AS program will be partially supported by the UK Market Accelerator for Green Construction Facility (“MAGC Program”) for which IFC is an implementing entity.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	32.79
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Climate (not covered in any category)

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

The expected Project-level outcome is increased access to climate finance (specifically, green residential buildings): Through this Project, IFC will build on Nedbank’s leading position in green financing to expand its nascent EDGE-certified green housing program, focusing on the supply side, by catalyzing uptake of green housing funding beyond the usual players. Beyond the Project-level outcome, IFC anticipates that the Project, combined with the other initiatives under IFC's programmatic approach to increase climate finance in South Africa, will help scale up climate finance, strengthen green finance standards in the country, and encourage replication by other South African institutions, thus, contributing towards increased environmental sustainability through the demonstration and capacity building channels.

IFC’s additionality under the proposed Project is expected to be both financial and non-financial. Financial additionality (Financing instrument): IFC will provide long-term, local currency funding to Nedbank, a resource that has been scarce in the local market. Financial additionality (Resource Mobilization): IFC’s anchor investor role will contribute to Nedbank’s efforts to crowd in additional commercial financing into the transaction. Non-financial additionality (Knowledge, Innovation & Capacity Building): IFC will explore providing EDGE tool training and certification AS support for the Bank and prospective developers.

E&S Category Rationale / Risks and Mitigation

The Project will support the expansion of Nedbank's portfolio of EDGE-certified green residential developments in South Africa. The green residential developments supported under the Project are expected to be comprised of business activities that have potential limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures with overall medium E&S risks. Therefore, the Project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The Project will not support coal-related activities or higher risk business activities that may include: a) involuntary resettlement; b) risk of adverse impacts on indigenous peoples; c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or d) significant occupational health and safety risks. For this investment, the Bank will be required to screen the eligible green residential development projects against the IFC Exclusion List, national E&S laws and regulations, and the IFC Performance Standards. In addition, the Bank will be required to meet the requirements of IFC's Performance Standard 2 on Labor and Working conditions. Financial Intermediary Sub-Project Disclosure IFC will periodically disclose the names, locations and sectors for qualifying sub-projects that have been supported by this IFC investment through financial intermediaries, subject to regulatory constraints and market sensitivities. Any qualifying sub-project(s) will be disclosed during the annual reporting cycle established with the client.

The key risks and impacts of the project derive from the Bank's capacity to maintain its management system to identify and manage the potential environmental and social ("E&S") risks associated with the sub-projects supported under this transaction. These risks are typically associated with labor and working conditions, occupational health and safety issues, waste management, and community health and safety, among others. Nedbank is an existing client and has implemented an E&S management system and designated staff in each business cluster with E&S responsibilities. Nedbank is largely aligned with IFC's labor standards under PS2: Labor and Working Conditions. As part of the Project, the Bank will be required to: (i) develop and implement E&S risk management procedures to screen supported sub-projects against the IFC Performance Standards; (ii) remain committed to applying the labor standards established by IFC Performance Standard 2; and (iii) submit a periodic report to IFC. IFC will review the Bank's E&S due diligence for the first three investments prior to the Bank's financing to support proper ESMS implementation.

Contacts

For Inquiries About the Project, Contact

Nedbank Limited
Arvana Singh
Head: Sustainable Finance Solutions
+27 10 234 8708
arvanas@nedbank.co.za
135 Rivonia Road, Sandown, Sandton, 2196, South Africa
www.nedbank.co.za

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date
Develop E&S procedures for eligible transactions	12/03/2021

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