LAGreen and GF Mega join forces to promote sustainability bonds focused on green projects in Mexico
The Latin American Green Bond Fund (LAGreen) and Operadora de Servicios Mega (GF Mega) strengthened their commitment to promoting sustainability bonds in Mexico. This follows LAGreen supporting the MXN 3,000 million (ca. USD 150 million) publicly listed sustainable bond issued by Mega in May. The fund subscribed MXN 506 million (ca. USD 26 million) as one if its anchor investors and will provide ongoing technical assistance to support post issuance activities related to the bond.
Through this partnership, LAGreen and GF Mega aim to demonstrate the tangible and measurable outcomes created through green bonds issued in Mexico. As a leading Mexican leasing company, GF Mega has over 15 years of operating experience in providing specialized financial solutions to small- and medium-sized enterprises (SMEs), which are largely underserved by traditional bank institutions. The proceeds of the bond will support projects with a green and/or social impact in Mexico, including – for example – the implementation of protected-agriculture techniques, which considerably improve the efficient and sustainable use of resources like land, water, and energy, while increasing its resilience to climate-change. Other types of project supported by the bond include certified aquaculture, small-scale solar PV projects, water treatment plants for SMEs in the industrial, agriculture and tourism sectors, as well as the financing of equipment for the measurement and control of vehicle emissions in urban centers.
As the first green bond fund dedicated to Latin America, LAGreen works with its partners, such as GF Mega, across the issuance process. The fund supports groundbreaking individual issuers when structuring green bonds, offers financing when the bond is issued and supports the issuer in implementing transparent and robust reporting methodologies.
Accordingly, LAGreen will leverage its Technical Assistance Facility to support GF Mega in the post-issuance phase, in areas like impact assessment, reporting and ongoing capacity building through its training sponsorship program. Through this program, the LAGreen TAF will sponsor high-quality technical trainings and courses to further advance the green and sustainable bonds issuance processes within the organization.
In addition to supporting the individual issuances, LAGreen is working towards a more dynamic and diverse green bond market in Latin America. By teaming up with GF Mega, this issuance marks the first thematic bond by a non-bank financial institution (NBFI) in the region. It also maintains the upward trajectory of the Mexican green bond market in the last years: In 2021, the market had a record number of issuances – 39 thematic bonds for more than USD 9 billion – from a diverse group of issuers from different sectors.
LAGreen Chairperson Johannes Scholl said: “We are honored to partner with GF Mega on this important issuance and beyond. Investing in protected agriculture will empower producers to manage resources more efficiently, reducing energy consumption and greenhouse gas emissions, while at the same time contributing to more resilient food-production. Furthermore, this issuance marks a milestone for GF Mega, LAGreen, and the young Mexican sustainability and green bond market, which is experiencing a very vibrant period, contributing to better connections of international capital markets with impactful projects on the ground.”
GF Mega’s Chairman Guillermo Romo said, “After LAGreen acted as an anchor investor of our latest bond issuance, we are pleased to further collaborate with the fund. Sustainable projects in Mexico show an immense amount of promise, as they connect capital markets to green and sustainable businesses in the country. We are very excited to see the results of this synergy and hope that this relationship will be fruitful and, above all, that it will be a long-term relationship to achieve the greatest impact.”
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