November 8, 2019
Standard Bank, Africa’s largest bank by assets, has played a key role in bringing the first ever green bond to East Africa.
Issued by Nairobi-based property developer Acorn Group, the bond will raise KES4.262 billion in project finance over five years for environmentally-friendly student accommodation in Nairobi.
Acorn is an established property developer in Kenya and has put its weight behind iconic buildings across the region, including the Coca-Cola and Deloitte regional head offices in Nairobi.
Standard Bank Group, via Stanbic Bank Kenya Limited and SBG Securities Limited, acted as lead arranger and placing agent on the bond, which was opened to investors in August this year.
“The deal holds significance as it is the first time a restricted public corporate bond offer has been approved by the Capital Markets Authority in Kenya,” says Kwasi Kwarteng, Head DCM Africa at Standard Bank Group. “It is also the first corporate bond to be rated by Moody’s Investor Service in East Africa and is sitting at B1 Global (one notch above the Kenyan sovereign).”
Standard Bank has previously been involved in arranging green bonds across geographies including the City of Johannesburg’s debut green bond, as well as Nigeria’s maiden sovereign green bond.
“What we are seeing is an increasing appetite for sustainable debt products within Africa.,” says Nigel Beck, Head of Sustainable Finance at Standard Bank. “This is in line with global trends, with issuance rates growing exponentially, Standard Bank expects to see at least USD 380 billion of global sustainable debt finance in the year.”
The success of the Acorn transaction despite quieter debt capital market activity in Kenya, demonstrates Standard Bank’s ability to partner with clients to bring successful bond issues into capital markets.
Mr Kwarteng adds that the bond has been structured as a loan type, which Acorn will be able to draw from. “This type of a scenario is rare, even from a global perspective. Never before have we seen this type of transaction take place in Africa.”
Acorn’s debut green bond has been certified as green by the Climate Bonds Initiative as it meets international green building standards, which are designed to achieve savings on energy usage and water consumption through the building materials used.
The finance that is raised via the bond will be used to fund six purpose-built student accommodation properties in Nairobi with a capacity of over 5 000 beds.
It is expected that the population of Nairobi will exceed 6 million by 2030 with 75% of the population falling below the age of 35. As it stands, the demand for student accommodation far outstrips supply.
These dynamics have helped to inform Acorn’s strategic focus on Purpose Built Student Accommodation (PBSA), which, Standard Bank says, aligns with its business imperative of driving purpose-led growth across the continent.
“We believe that success is inextricably linked to the wellbeing of our clients and the communities in which we operate. As part of this journey, we are looking to embed our Social, Economic and Environmental (SEE) framework into our product offering,” says Mr Beck
In response to heightened demand for sustainable and impactful investment solutions, Standard Bank has a dedicated Sustainable Finance Business unit in place. The unit is tasked with capturing emerging opportunities as companies and funds become mandated to invest in green and social assets.