Year: 2021

Winner: Coppel MXN40 Billion Sustainability-linked Loan

Mexico’s Coppel Group celebrated its 80th anniversary in 2021 by adding retail stores and expanding its newest merchandise line, motorcycles.

The privately held company finished the year with more than 1,600 stores throughout Mexico and plans to push past the 2,000-store mark midway through the decade. It did not reduce its workforce or shutter stores during the pandemic.

It also marked the anniversary with record-breaking syndicated loan, securing $2.5 billion in late May 2021.

“I can think of no better way to celebrate 80 years than this loan,” Antonio Suárez, CFO of Coppel Group, tells LatinFinance. “It was a landmark for the company, Mexico and all the parties involved.”

The loan, completed in May 2021, was the largest-ever loan to date for a private company in Mexico and linked to a five-year sustainability plan, setting it apart in the region and earning Coppel the award for Syndicated Loan of the Year.

Suárez says the decision behind the syndicated loan corresponded to an assessment of Coppel’s financing structure at the time and future plan to expand its retail footprint, as well as its bank and pension fund.

He says the company had major loan payments coming due between 2021 and 2023 from previous syndicated loans and decided that uncertainly created by the pandemic warranted a new plan.

“We wanted to restructure our debt and the banks had money they needed to put to work. We are a company with a good risk return profile, so we talked to the banks and they agreed,” says Suárez.

Four banks, BBVA, HSBC, Santander and Scotiabank, were not only involved in the transaction, but suggested to Coppel that it expand its original plan from just a loan to flatten its amortization schedule to one that included ESG components. Coppel jumped on the idea.

The loan was structured in such a way the Coppel will receive a discount of five basis points on its interest rate if it meets its targets; it faces a similar increase of the rate if it fails to comply.

The company, in consultation with banks, picked two areas – energy transformation and gender equality – as conditions for the loan. These two issues are among 30 different ESG projects the company has underway in its current five-year plan.

On the energy front, the company pledged to install solar panels on stores, increasing the its generating capacity from 3MM in 2020 to 86.4MW by 2025. It has other efforts, which are not part of the loan conditions, also in the works, including elimination of plastic bags and a fuel-efficient vehicle fleet.

More than half of Coppel’s 113,000 employees are women, but only 9,000 are in a management position, defined as having at least one person reporting to them. The ESG target for 2025 is for women to hold 39% of leadership roles.

In addition to its ESG department, Suárez says Coppel has a created a special committee in charge of analyzing each business decision the company makes and how these decision fit into the ESG strategy.

“We do not think of this is a five-year plan, which is how long the loans lasts, but as a commitment to the future. It is going to last well beyond the loan period,” says Suárez. – LF