Virgin Money is pleased to announce that it has signed a new three-year agreement with Foresight Sustainable Forestry Company Plc (“FSF” or “the Fund”), under which it has provided a committed Revolving Credit Facility (“RCF”) of £30 million and an uncommitted accordion facility of up to an additional £30 million.
FSF is an LSE-listed company which invests in forestry (both existing and afforestation) and is committed to meeting the highest sustainability standards. It was awarded the Green Economy Mark by the London Stock Exchange at IPO and, like the Bank, is aligned with the UN’s Sustainable Development Goals.
The transaction both directly and measurably supports key components of Virgin Money’s Environmental Social and Governance (ESG) strategy which include working with customers and communities to create shared prosperity, having 10% of business lending balances to Sustainability Changemakers by FY27, and supporting the transition to a low carbon economy by reducing financed emissions.
Giving further background, Keith Wilson, Head of Energy & Environment at Virgin Money said: “This transaction represents an important milestone in the development of our business. With an established energy lending product offering and an ambitious ESG strategy, we are increasingly focussed on growth through diversification. Sustainable forestry has the potential to make a significant contribution to Net Zero and I am extremely pleased we have been bold and made an early move into this market”.
Richard Kelly and Rob Guest, Co-Heads of Foresight Sustainable Forestry Company, commented:
“We are delighted that the RCF funding can be deployed into our exciting pipeline of forestry and afforestation assets, further enhancing the growing impact of FSF and the contribution we are able to make in the twin fights against climate change and biodiversity loss.”
Richard Davidson, Chairman of Foresight Sustainable Forestry Company, also commented
“Reaching financial close on the RCF is an important part of the business plan documented in FSF’s IPO Prospectus. The RCF provides access to flexible capital which will be used to grow the business through the delivery of our deal pipeline. The Company is very pleased to be working with Virgin Money and are proud that the interest margin is aligned to S & ESG targets which form a core part of FSF’s investment strategy”.
The RCF has a 3-year tenor and two 1-year extension options. The accordion feature allows the Fund to bring debt in line with 30% of Gross Asset Value, as detailed in the Fund’s prospectus. It gives the Fund a committed source of flexible funding outside equity raisings. Once drawn, the facility is expected to be paid down periodically by the proceeds of equity issues. This enables new investments to be made with certainty of funding and on a timely basis, reducing performance drag associated with holding cash balances.
The interest margin chargeable on the RCF is linked to Sustainability and ESG (S & ESG) performance, with FSF incurring a premium or discount to its margin based on its performance against defined targets. These S & ESG targets are:
- A year-on-year increase in the total number of hectares of land acquired for carbon sequestering activities (including afforestation, peatland restoration and voluntary carbon credit acquisition)
- A year-on-year increase in the total number of people completing FSF’s Forestry Skills Training Programme.
Performance against these targets will be measured annually, with the interest cost of the RCF being amended accordingly in the following year.
This latest deal with FSF further evidences Virgin Money’s reputation and commitment to carbon reduction lending. A number of targeted new lending projects are on the horizon, and its wider portfolio includes assets across solar, onshore wind, biomass and hydro-electric power.
Virgin Money was advised by Osbourne Clarke. FSF was advised by Gowling.
