Macquarie invests in Affinity’s green bond

Macquarie has invested an undisclosed amount in Affinity’s green bond, which was issued in October.

The asset management company is one of five institutional investors in the £130 million bond issued by the company to fund projects aimed at improving Affinity’s sustainability performance. This includes water treatment, leakage reduction, catchment management, river restoration, climate change adaptation and energy efficiency.

The details of the other four investors or the size and terms of stakes have not been disclosed by Macquarie or Affinity.

Senior vice president of Macquarie Asset Management’s private credit arm, Gareth Edwards, told Utility Week the company was attracted to the long-dated, high-quality cashflows from this investment, coupled with the positive use of capital for environmental purposes.

He said: “The pension funds, insurance companies and sovereign wealth funds we typically invest on behalf of are increasingly seeking investments which have a positive and measurable impact, without compromising on returns.

“Green reporting is also attractive to investors seeking to measure the impact of their investment across a range of metrics, including greenhouse gas emissions avoided and alignment with the UN’s Sustainable Development Goals.”

The Australia-based company, which bought a majority stake in Southern Water in August, continues to invest in the UK water and wastewater sector, having committed around £1 billion in debt finance across the capital structure to date.

Affinity has undergone a number of changes in recent months including chief executive Pauline Walsh stepping down in September together with an unconfirmed number of redundancies being made.

Michael Blake, treasurer of Affinity, said: “Affinity Water is a steward of the local environment. We are absolutely focused on delivering a long-term sustainable supply of water and giving customers an exceptional experience. We are delighted likeminded investors are willing to support us with funding which will be invested in accordance with our Green Finance Framework.”

Edwards added Macquarie supports sustainability driven investments because it believes they drive better investment performance and outcomes for its clients and portfolio companies over the long term.

“It is well-known that the UK’s water and wastewater infrastructure needs significant investment to improve the quality and resilience of its services, particularly in light of population growth and the effects of climate change. We are pleased to be part of the solution, connecting stable institutional capital with opportunities to support the sector through long-term debt financing agreements,” he added.