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28 Feb 2024

Why care about sustainable lending?

Lenders are now prioritising sustainable lending and scrutinising net zero commitments, leading to ESG considerations becoming increasingly central to decision-making in private equity deals. Helen Lucas unpacks why we should care about sustainable lending. 


The latest Private Equity Trends Report reveals that 59% of General Partners (GPs) believe implementing ESG best practices enhances business value and attractiveness to buyers, with almost 20% of them saying the uplift in value is greater than 10%, despite broader market valuation pressures. Watch the video to find out more.

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    Why care about sustainable lending

    In our latest Private Equity Trends Report, 59% of GPs state that implementing environment, social and governance (ESG) best practice adds value to your business, whilst a fifth say the uplift in value is above 10%.

    This is significant given the current market-wide pressure on valuations more generally. This is also validated through a recent survey, Investec Sustainability: Ambition to Action, which highlighted that 65% of PE-backed corporates believe that a strong ESG performance makes them more attractive to potential buyers.

    While borrowers are clearly on board with the ESG agenda, lenders are matching their determination with a significant shift in their thinking.

    The importance of sustainable lending is growing because it's the right thing to do.

    Consequently, we see ESG becoming even more central to lending decision-making. Lenders are now scrutinising their client base with net zero targets front of mind, and private credit funds need to satisfy an ever more discerning LP base with data to back it up.

    The evidence shows that on private equity deals, both investors and borrowers are factoring in ESG considerations. For the private equity sector the result is a growing trend to collect ESG data, report on it, and take positive action for improvement.

     

    

 

Are you ready to navigate a changing landscape?

The report shares valuable insights into the challenges GPs have experienced in the past 12 months and their expectations for the coming years.

Investec Sustainability: ambition to action

We’ve gathered insights from leading mid-market businesses around the UK and sought to answer the most common questions facing businesses on the topic of sustainability.

Contact us

Helen Lucas
Helen Lucas

Co Head of UK Direct Lending Origination

Jonathan Harvey
Jonathan Harvey

Fund Solutions

Kate Gribbon
Kate Gribbon

Head of Financial Sponsor Coverage & Origination

Helen Lucas
Helen Lucas

Co Head of UK Direct Lending Origination

Jonathan Harvey
Jonathan Harvey

Fund Solutions

Kate Gribbon
Kate Gribbon

Head of Financial Sponsor Coverage & Origination