Legal & General has announced that it has signed a £150million social loan to finance 5,500 affordable homes in a bid to help address the significant demand for affordable housing across England. The loan was arranged by BNP Paribas, HSBC UK, and SMBC Group, in a transaction with Legal & General Affordable Homes (LGAH).
The deal was structured as a social loan, available for projects that help tackle pressing social issues such as the delivery of more affordable housing. This is the first UK insurance-syndicated use of proceeds social loan, and it adheres to the Loan Market Association (LMA) social loan principles, with all schemes screened by LGAH’s Scrutiny Panel, which oversees the selection, evaluation and monitoring of investments. BNP Paribas acted as social loan coordinator, joint lead arranger and lender; HSBC UK as facility and security agent, joint lead arranger and lender, and SMBC as joint lead arranger and lender, with each bank committing £50million.
LGAH was launched in 2018 to increase the affordable housing supply and now operates over 2,500 homes across the country, with a further 6,500 in its pipeline. As one of the government’s strategic partners, LGAH’s mission is to significantly increase the supply, sustainability, and quality of affordable homes, aiming to deliver best-in-class customer service. The new loan will help accelerate the delivery of homes for social rent, affordable rent and shared ownership across the country.
Chris Hewitt, financial director of Legal & General Affordable Homes, said: “Since launching four years ago, LGAH has deployed institutional capital at pace to accelerate the delivery of affordable homes across the country. In the last few years, Legal & General has committed over £1billion of its own retirement funds to these efforts, and they will be used alongside this innovative social loan structure. This product reinforces our commitment to the sector, and our work to help reduce inequalities in communities across the country. While we are pleased with our progress, 1.4million households remain on social housing waiting lists across the UK and there are still major challenges to address.”
Laetitia Girolami-Boyer, sustainable finance markets director, BNP Paribas, said: “BNP Paribas is delighted to have partnered with L&G Affordable Homes on this social loan. This collaboration demonstrates the power of sustainable finance to support affordable housing, well-being and community engagement. The alignment with the LMA Social Loan Principles catalyses best practice in the sector, and the transparency embedded into the loan is a further feature to ensure tangible social impact.”
Robert King, Head of Sustainable Finance at HSBC UK, said: “HSBC UK are committed to the principle of ‘achievable change’ and supporting our clients to accomplish their business goals through tailored and innovative solutions. We want to show our clients how their ambitions for sustainability and social responsibility will not only have a big impact on the world around us but make good business sense. We are committed to supporting our clients’ sustainability ambitions through tailored and innovative solutions like this social loan for Legal & General Affordable Homes.”
Paul Duffy, head of client coverage, global financial institutions group EMEA at SMBC, said: “We are delighted to be enhancing our relationship with L&G Group via this social loan facility which will help to provide over 5,000 affordable homes in some of the most deprived areas of England. This facility is a perfect example of SMBC’s strategic goal to provide social and sustainable finance to support the real economy.”
