Multicountry: Project Chamonix

Multicountry: Project Chamonix

SUMMARY

STATUS: Approved
MEMBER: Multicountry
SECTOR: Multi-sector
E&S CATEGORY: N/A
PROJECT NUMBER: 000844

FINANCING

APPROVED FUNDING: USD61 million
FINANCING TYPE: Nonsovereign

TIMELINE

CONCEPT REVIEW: December 7, 2023
FINANCING APPROVAL: April 17, 2024

OBJECTIVE

Support the expansion of the infrastructure securitization market, thereby fostering greater mobilization of private capital into AIIB emerging market members.

DESCRIPTION

The project involves the acquisition and securitization of infrastructure assets in AIIB emerging market (EM) members.  This is achieved through the proposed investment of up to USD61 million into the debut infrastructure collateralized loan obligations (CLO) (alternately referred to as infrastructure asset-backed securities [ABS]) issuance sponsored by Chamonix Partners Capital Management (Chamonix). 

Chamonix is an infrastructure and real assets-focused manager, an affiliate of Natixis SA (Natixis SA or Natixis) and part of the Global Financial Services arm of Groupe BPCE, one of the largest banking groups in Europe and globally. 

The issuance is expected to be internationally marketed through two special purchase vehicles (SPV) one incorporated in Jersey, United Kingdom and the other incorporated in Delaware; AIIB will subscribe to the Notes issued by the Jersey SPV. The issuance size is expected to be USD306 million across senior, mezzanine and equity tranches and follow a similar structure as previous infrastructure CLOs. 

The underlying portfolio comprises project and infrastructure finance loans originated by Natixis, focusing on global EM. The portfolio features a strong sustainability theme with over 80 percent exposure to renewable energy and digital infrastructure assets, reflecting the growing demand for such assets in the target geographies. The remainder will be allotted to other core infrastructure assets.

Natixis is the originating bank of the loan assets which are selected by Chamonix for the portfolio, which will adhere to the corporate policies of Natixis with respect to restrictions on, inter alia, coal, thermal mining, and companies with significant operations in these areas. In addition, no upstream oil or gas assets will be included in the CLO portfolio. As an added impact of AIIB’s support, Natixis will undertake to originate new green infrastructure financing in AIIB members at least equal to AIIB’s commitment amount which may be securitized in the future by Chamonix

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Environmental and Social instruments. The Project applies the Environmental, Social and Governance (ESG) Approach to Capital Market Operations provided under AIIB’s Environmental and Social Policy (ESP). Natixis as the originating bank will retain a portion of each underlying asset and provide ongoing loan Environmental and Social (E&S) performance monitoring service for Chamonix. The Project will rely on Natixis’s Environmental and Social Management System (ESMS) which is consistent with the spirit and vision of AIIB’s ESF. Consistent with the ESG Approach to Capital Market Operations under the 2024 ESF, the Policy on the Project-affected People’s Mechanism (PPM) would not apply to the Project. In addition, Natixis maintains a no-go sector in its sector policy. Coal and companies which rely primarily on coal are excluded. Although the no-go sector list is not fully aligned with AIIB, the Bank’s primary review of the project underlying loans indicates there are no projects involved in any of the activities included in AIIB’s Exclusion List. The Bank will further require the Project sponsor to review the AIIB Exclusion List and get warranties on compliance with this requirement. 

Environmental and Social Aspects. Natixis adopted the Equator Principles (EP) on its E&S risk management since 2010. Therefore, Natixis has strong commitment to E&S risk management and has incorporated ESG risk assessment including climate risk into the credit approval process. For all category A and higher risk category B projects, independent E&S consultants are hired to conduct E&S due diligence (ESDD) and provide on-going E&S monitoring service. For all project finance, Natixis follows the E&S review under EP 4, including: (i) reviewing and assigning an E&S risk category based on IFC E&S categorization process, (ii) conduct an E&S assessment against host country national laws and IFC Performance Standards (PS) if in Non-designated Countries, and conduct appropriate climate risk assessment, (iii) requires the client to develop and maintain an ESMS, (iv) require clients to demonstrate effective stakeholder engagement, (v) establish effective Grievance Mechanism (GRM) proportional to the project risk and impact, (vi) incorporate remedial actions into E&S covenants, (vii) disclose category, sector, region, country information of all project finance. 

Project Grievance Redress Mechanism (GRM) and Monitoring Arrangement. Natixis has in place an External Communications Mechanism (ECM) in conjunction with its parent company, BPCE, to address complaints regarding its operation. During project administration, Chamonix will provide AIIB with E&S performance updates on the CLO portfolio assets including material risk events, risk escalation and grievances. In addition, Natixis will retain a portion of each loan and provide loan monitoring service to Chamonix, including the E&S performance monitoring. In case of any E&S noncompliance and incidents, Natixis will inform Chamonix and resolve the issue with the borrower to mitigate any potential reputation risk or business continuity and direct financial impact. If the issue cannot be resolved, Natixis may exercise available remedies through clauses in the loan documentation.