Global energy giant Sembcorp launched its first Sustainability Bonds (SLBs) and raised S $ 675 million. The company is the first and largest show of its kind in Southeast Asia.
It also marks the final phase of the company’s transition to a net zero future, Sembcorp said in a statement. The SLB issue was funded by IFC with an investment of S $ 150 million. This is IFC’s first SLB investment.
Unlike traditional green bonds, SLBs involve issuers who are committed to improving their performance against tailor-made ESG (environmental, social and governance) objectives.
“Sembcorp, through its wholly owned subsidiary Sembcorp Financial Services Pte. Ltd., priced its first SLB today, anchored by a S $ 150 million investment from IFC. It is also IFC’s first global investment as an investor in an SLB, with the partnership between Sembcorp and IFC poised to support more inclusive economic growth and private sector participation, while promoting sustainable business practices and significant employment opportunities, ”the company said in a statement.
The ten-and-a-half-year Singapore dollar bond carried a coupon of 2.66 percent.
The company has declared that the net proceeds of the SLB will be used to finance the general working capital needs of Sembcorp and its subsidiaries (Group), to refinance the existing debt of the Group and / or to finance or refinance the renewable energies of the Group, or potentially, other sustainable projects.
Sembcorp has over 3.3 gigawatts (GW) of renewable energy capacity including solar, wind and energy storage solutions in key markets such as Singapore, China, India, UK and Vietnam, with the objective of quadruple its installed renewable energy capacity to 10 GW by 2025 from 2.6 GW in 2020.
Wong Kim Yin, Group President and CEO of Sembcorp Industries, said, “The issuance of our first SLB underscores this commitment. We are delighted that IFC has chosen our issue as its first investment in an SLB globally. Their support validates our strategy and stimulates us in our approach to support the global energy transition and a low carbon economy.
In May of this year, Sembcorp announced its intention to increase the profit contribution of its sustainable solutions portfolio to 70% (from 40%) by 2025.
It aims to achieve a compound annual growth rate (CAGR) of 30%; its portfolio of integrated urban solutions has a 10% CAGR.
By 2025, Sembcorp is targeting gross installed renewable energy capacity of 10 gigawatts (Gw). Its current installed renewable energy capacity (including wind, solar and energy storage) is 2.6 Gw.
In addition to China and Southeast Asia, the company is counting on India to stimulate its growth.
Speaking to Business Standard, Vipul Tuli, CEO of Sembcorp Industries for South Asia, said India would be a significant contributor.
“India now represents two-thirds of the global renewable energy portfolio. Three markets will develop: India, China and Southeast Asia. While India’s percentage share may decrease, in absolute terms it will increase dramatically, ”Tuli said.