For pioneer in lightweight construction Etex, energy efficiency was at the top of the agenda well before the current energy crisis facing many across Europe.
Thermal insulation materials are a key component in energy-efficient buildings, and the market is growing as the building industry works towards CO2 emission-reduction targets and homeowners look to cut their energy bills.
The European Union has proposed rules that will require buildings with the lowest Grade G energy rating to be renovated by 2030. Buildings account for roughly 40% of EU energy use, and most are heated by fossil fuels1.
Family-owned company Etex, headquartered in Zaventem, Belgium, agreed to acquire European insulation expert URSA in January 2022 as part of a strategic move to become a global leader in lightweight and more sustainable building solutions.
This strong sustainability angle was also important in allowing Etex to access the capital it needed to complete the acquisition.
Etex approached the capital markets in May with a Schuldschein (a privately placed issue of medium to long-term unsecured debt under German law). As a sign of its sustainability ambitions, Etex linked the interest payments on the debt to an independent assessment of environmental, social and governance risks affecting its business.
Etex currently has an ESG Risk Score from Sustainalytics of 18.1. If that score rises above 20.1, the company will pay investors a higher interest rate. Conversely, Etex will save on its borrowing costs if its ESG Risk Score falls below 16.1, giving the company an incentive to pursue its sustainability ambitions.
Right note with investors
The ESG-linked feature struck the right note with investors, and Etex was able to close the financing at EUR 800 million, above the announced target of EUR 300 million. That kind of size is usually only available in the Schuldschein market for German or Austrian borrowers, underlining Etex’s appeal.
Etex CEO Bernard Delvaux says the Schuldschein broadened the company’s investor base and demonstrated investors’ confidence in its strategic move into insulation products.
“The acquisition of URSA confirms the portfolio shift initiated a few years ago by Etex to become a global leader in lightweight and modular construction. This acquisition is a strategic fit for Etex, combining a new growth platform with a strong focus on sustainability,” he says.
The sustainability angle was also important in allowing Etex to raise funding at a difficult time for European investors, with the market rocked by rising interest rates and wider macro headwinds.
The placement comprises three euro-denominated tranches with maturities of three, five and seven years, at fixed and floating rates, for an average maturity of 5.8 years. All tranches were priced at the lower end of the marketed price ranges – another sign of strong demand. HSBC acted as Joint Lead Arranger on Etex’s Schuldschein debt.
“Energy-efficient buildings are essential to reducing carbon emissions, and companies like Etex are leading the transition,” says Merwan Labtani, Head of Wholesale Coverage at HSBC Continental Europe, Belgium. “The strong response to this financing confirms that capital is available for companies that are moving towards a low-carbon future and shows the value of a credible sustainability strategy in difficult market conditions.”