Preh Group's dedication to sustainability: ESG-linked syndicated loan
"Sustainability is an integral part of our corporate vision: WE passionately strive for excellence creating smarter and sustainable solutions in everything we do." For more than 100 years our company has been shaped by a tremendous drive for innovation. This is evident in our products, competencies and how we do business. For this reason it is only natural for us to embed corporate sustainability in our financing too.”
Rui Marques Dias
CFO, Preh Group
Innovative solutions for human machine interfaces (HMI) and e-mobility
As a globally positioned tier-1 automotive supplier, Preh Group employs over 7,000 staff members. In 2020, it generated revenues of around EUR 1.2 billion. The company was established in 1919 in Bad Neustadt an der Saale, Bavaria, before becoming part of Chinese Joyson Group in 2011, which is currently one of the 40 largest automotive suppliers in the world. Within the Group, Preh represents the automotive electronics division. Preh's control systems for vehicle interiors can be found in many well-known automobile brands, from Audi, BMW and Daimler to Ford, GM, Porsche and Volkswagen, just to name a few. The company is also a technological leader in the field of low-voltage and high-voltage e-mobility applications.
EcoVadis ESG rating impacts financing costs
Since 2013, Preh has invested more than EUR 100 million in the e-mobility product division. In the 2020 financial year, the division succeeded in generating an enormous increase in revenue of roughly 65%, with the future pointing towards continued strong growth and corresponding investments. Ensuring early refinancing for promissory notes maturing in summer 2022 was also on the agenda. As a long-standing strategic financial partner to the Preh Group, Commerzbank put forward a sustainable solution where financing costs would be linked to, inter alia, meeting defined ESG key performance indicators, or improving a comprehensive ESG rating assigned by a recognised external rating agency.
The right recommendation at the right time for Preh: stakeholder demands for publishing the firm's sustainability orientation are growing, sustainability is becoming a critical factor in both OEM supplier ratings and in recruiting new staff, and non-financial CSR reporting will soon be mandatory and set an expanded focus.
Instead of being merely tied to individual ESG key performance indicators, Preh opted in favour of a more comprehensive external ESG rating. It is assigned according to a uniform standard by EcoVadis, one of the leading ESG rating agencies. Commerzbank's experienced deal team put together an ESG linked syndicated EUR 385 million loan facility, half of which was taken by Commerzbank itself, also serving as sustainability coordinator in addition to being the sole bookrunner. For Preh, the financing represents a logical extension of its sustainability strategy, underscoring its high ambition and firm commitment to sustainability.