UltraTech Cement Ltd. has raised $500 million through a sustainability-linked loan with participation from six banks. This is the second sustainability-linked financing raised by the cement maker, subsequent to its inaugural sustainability-linked bond issuance in 2021.
The Aditya Birla Group company has raised funds from Sumitomo Mitsui Banking Corp., State Bank of India, BNP Paribas, DBS, Mitsubishi UFJ Financial Group and Mizuho Bank, according to an exchange filing on Monday.
SMBC acted as the sole sustainability coordinator for this transaction and served as the sole advisor on UltraTech's sustainability-linked financing framework.
The financing is in alignment with UltraTech's recently published SLFF. The sustainability performance targets include a reduction of scope 1 emissions by 27% by March 2032 and an increased share of green energy from waste heat recovery systems and solar and wind power in its total energy mix to 85% by the financial year 2030 and 100% by fiscal 2050, the company said.
The fundraise comes after UltraTech announced an open offer to acquire a 26% stake in India Cements Ltd. The open offer is scheduled to tentatively begin on Sept. 19 and conclude on Oct. 3. If fully subscribed, the open offer at Rs 390 per share would amount to Rs 3,142.4 crore.
What's Sustainability-Linked Financing?
Sustainability-linked financing refers to financial instruments, such as loans or bonds, where the terms and conditions are tied to the borrower's performance against predefined sustainability or environmental, social, and governance criteria.
The terms of the financing, such as interest rates or fees, are linked to the borrower’s performance relative to these sustainability targets. For example, a borrower may receive a lower interest rate if they meet or exceed their sustainability targets, or they may face a higher rate if they do not meet these targets.
UltraTech's stock closed 0.04% lower at Rs 11,337.10 per share on the NSE, compared to a 0.76% advance in the benchmark Nifty. The share price has risen 39.66% in the last 12 months and 8.34% on a year-to-date basis.
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