Meridiam reaches financial close in Turkey for Elazig integrated health campus PPP project with the first investment grade and social project bond enhanced by EBRD and MIGA.
This project is a landmark social infrastructure PPP : the first ‘green and social bond’ for an infrastructure project in Turkey; the first long-term project bond in the Turkish PPP market with a 20-year maturity; and the first project to feature the credit enhancement provided by the European Bank of Reconstruction and Development (EBRD) and the World Bank’s Multilateral Insurance Guarantee Agency (MIGA) following the COP21 global commitment to support Emerging countries Sustainable Development Goals (SDG). Meridiam’s third hospital PPP to close in Turkey, the Elazig Project will entail the design, construction, finance, operation and maintenance of a 1038-bed integrated healthcare campus.
Together with Ronesans, Meridiam, the EBRD and MIGA structured a first time credit enhancement scheme, which enabled Moody’s to assign a Baa2 rating, two notches above the current rating of Turkey. The complementarity of the EBRD and MIGA products enabled a credit enhancement scheme which instrumental in supporting debt capital markets products as an alternative source of funding for infrastructure. The €288 million bond has been issued by way of a private placement amongst leading financial institutions, notably including IFC who underwrote a portion without enhancement and Proparco (Groupe AFD) demonstrating the strong commitment of France in supporting SGDs.
The project bond has been certified as “Green and Social” by Vigeo EIRIS.Following the Meridiam Impact investment standards, the Project will fully meet Meridiam’s ESG requirements as well as IFC’s Performance Standards (2012), the EBRD’s Performance Requirements (2014) and World Bank Group Environmental, Health and Safety (EHS) Guidelines.
The Project consists of a 1038-bed integrated health campus comprising a general hospital, women’s and children’s hospital, psychiatric hospital, mouth and dental health Centre, and additional support buildings and facilities. The campus will help serve a growing population in eastern Turkey by offering greater access to high quality healthcare services and technology, as well as additional capacity for expansion in the future.
Serving not only as a landmark in the transformation of Turkey’s healthcare sector, as Turkey’s first project bond, Elazig is also expected to catalyze Turkey’s nascent capital markets sector for infrastructure funding. “The Elazig green and social project bond clearly demonstrates the leadership of EBRD and MIGA as multilateral institutions designing solutions to support investment and SDGs of emerging and transition economies; and we will continue to pioneer new solutions together with them,” said Thierry Deau, Founder/Chairman, Meridiam.
MUFG supported the bond financing as bookrunner, and HSBC acted as sole arranger and global coordinator for the bond issue. Total project costs amounted to approximately €360 million, financed through the bond issue and equity investment by the shareholders of ELZ Saglik Yatirim A.S., the project company formed to implement the Project.