EQT Signs Record $4.4 Billion Sustainability-Linked Loan Tying Rates to Portfolio Companies’ Performance Against Material Targets

Private equity and venture capital investor EQT Group announced that it has established a new $4.4 billion sustainability-linked loan (SLL), with interest rates tied to the performance of portfolio companies in its Asia Pacific-focused private equity fund, BPEA IX, towards material company-specific sustainability targets.

BPEA IX is the largest-ever Asia Pacific-dedicated private equity fund raised to date, with $15.6 billion in total commitments.

EQT said that the new sustainability-linked facility is the largest of its kind in Asia and one of the largest globally to date.

The new SLL features interest rate incentives that reward actual progress towards targets and sustainability value creation. Under the terms of the SLL, each BPEA IX portfolio company will establish two materiality-based metrics and targets that are tailored its specific industry and operations, alongside a dedicated governance metric to embed sustainability into strategic decision-making. On climate, the structure requires that each portfolio company also determines its tailored climate target that is scientifically grounded and commercially viable.

The SLL also requires that all metrics and targets align with international frameworks and receive “no-objection” clearance from multiple sustainability coordinators, and that performance against targets is verified annually by an independent third-party advisor.

Tang Zongzhong, Head of Sustainability at EQT Private Capital Asia, said:

“As a pioneer in the use of Sustainability-Linked Loans in private equity, we are proud to serve as a standard-setter in the market. We believe this Facility sets a new benchmark for the industry with an innovative approach that ensures sustainability targets are relevant and meaningful to our investments, and enables us to truly drive value creation and impact at scale.”

The new facility marks EQT’s third SLL in Asia, including a prior $3.3 billion financing for BPEA Private Equity Fund VIII, which was also the largest of its kind in Asia at the time.

Hari Gopalakrishnan and Nicholas Macksey, Co-Heads of Private Capital Asia at EQT, said:

“Breaking our own record to establish another large-scale SLL reflects our deep conviction that sustainability creates value and contributes meaningfully to business growth and long-term investment returns.”

Sustainability Coordinators on the transaction included BNP Paribas, Crédit Agricole CIB, and ING.

Antoine Rose, Head of Sustainable Investment Banking for Asia Pacific and Middle East at Crédit Agricole CIB, said:

“We are seeing strong demand for sustainability-linked loans from borrowers across Asia, as sophisticated corporates increasingly integrate sustainability into their business and financing strategies to meet international standards. EQT’s launch of Asia’s largest sustainability-linked loan establishes a benchmark for other large-scale corporates in private equity and other sectors, enabling them to align their sustainability efforts with global best practices as they pursue their own sustainable development goals.”