L&Q completes landmark £100 million “positive incentive loan” with BNP Paribas

Published on 25/06/2018

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L&Q has today announced that it has secured a unique five year, £100m credit facility from BNP Paribas. The facility is structured as a positive incentive loan whose interest rate is tied to L&Q meeting certain social impact key performance indicators. 

Uniquely, the facility is structured as a positive incentive loan whose interest rate is tied to L&Q meeting certain social impact key performance indicators. Through its Independent Lives programme, L&Q undertakes capacity building by working directly with its residents and others in the wider community to develop their employability skills and find appropriate and sustainable jobs. Under the terms of the agreement, L&Q will benefit from an undisclosed discount on the margin of the loan if it succeeds in getting at least 600 unemployed residents back into work in the first year, rising by an additional 25 residents in each subsequent year.

The loan also includes an option to extend the term by two additional years, as well as the possibility of adding an environmental key performance indicator later in the life of the facility. This will supplement the existing discount available to L&Q if it meets the social impact target.

The loan complements L&Q’s existing £5bn funding arrangements and will enable it to continue building quality, affordable homes for the most vulnerable in society.

Waqar Ahmed, Group Finance Director at L&Q, said: “Everything that L&Q does begins with social purpose, and we believe that no one should be denied the opportunity to achieve their potential because of where they live.

“Through the L&Q Foundation we are investing £250 million to transform communities and help people lead independent lives. By forging strong relationships with partners, we are able to deliver even greater charitable outcomes.

“BNP Paribas is exactly the sort of partner we are looking for, and we are delighted to have completed this ground-breaking deal with them. The team at BNP Paribas share our sense of social purpose, and our combined vision is going to help hundreds more people into employment every year.”

In February 2017, BNP Paribas announced a new corporate social responsibility policy, designed to create a positive impact in society. By extending loans to corporates and developing sustainable investment products, the bank aims to contribute to the United Nations’ Sustainable Development Goals.

Simon Gates, UK Head of Corporate Coverage and Transaction Banking at BNP Paribas, said: “We are pleased to have closed this transaction with L&Q. It is the result of close collaboration to conceptualise and structure what represents a landmark deal for sustainable finance in the UK: to our knowledge, this is the first ever UK housing association loan that incorporates a concrete, positive impact metric.

“L&Q will be assessed on the actual impact realised in the community in terms of helping residents back to work. We think this is a watershed moment and we are honoured to support L&Q as it continues its essential work of building affordable, high-quality homes.”

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