Border-wide Green Loan for SOFOPLUS in Mexico

Background

The NADBank Green Loan Framework provides a structure to support meaningful environmental projects requiring small loans that NADBank is not suited to finance directly, but that could be financed through local financial intermediaries with financial and technical support from NADBank. As local entities, financial intermediaries are in a better position to consider opportunities for green investments, assess risks and provide financing to smaller projects and enterprises.

Sofoplus is a non-bank financial institution created in 2006 that provides financing solutions through four lines of business: direct loans, assignment of rights (i.e., factoring), lines of credit and leasing. Like other NBFIs, Sofoplus faces challenges in meeting its long-term funding needs in the current financial environment in Mexico. Additionally, the demand for green financing is increasing in Mexico, but options are limited for SMEs.

In this context, NADBank plays an important role by providing an alternate funding source that meets the characteristics required for green financing, allowing SOFOPLUS to expand green loan options for its clients. The terms and conditions offered under the NADBank loan will enhance the financial viability of eligible sustainable projects through longer financing terms that SOFOPLUS will pass on to its clients. This transaction will also help SOFOPLUS extend its efforts in green financing beyond its current customer base.

Description

The project consists of providing a corporate loan for up to US$10.0 million (or its equivalent in Mexican pesos) to Sofoplus to fund its financing operations with SMEs for the implementation of eligible projects under the NADBank Green Loan Framework. Based on its past investment portfolio and current business plan, the loan proceeds are expected to be allocated to projects in the following sectors:

• Sustainable buildings for construction of new buildings or improvements to existing buildings to obtain Leadership in Energy and Environmental Design (LEED) or Excellence in Design for Greater Efficiencies (EDGE) certification or their equivalent;
• Mobility for electric and hybrid vehicles, as well as the construction and acquisitions of charging stations and other related infrastructure;
• Sustainable industrial parks for construction or improvements to industrial parks equipped with energy and water management systems, as well as monitoring equipment for energy and water consumption;
• Water and wastewater management for infrastructure and equipment for the efficient supply and management of water and wastewater in industrial processes; and
• Renewable energy for small-scale renewable energy systems installed for residential, commercial, and industrial facilities (solar photovoltaic, thermal, concentrating solar systems, wind, hydraulic and biomass).

Benefits

The loan proceeds will be allocated to activities associated with sustainable buildings, sustainable industrial parks, mobility, water and wastewater management and renewable energy. The expected environmental benefits include reductions in greenhouse gas (GHG) emissions, as well as energy and water savings. Results measurement indicators for energy and water savings, as well as the displacement of greenhouse gas emission will be consistent with the NADBank Green Loan Framework and will govern results reporting under this loan.