Private equity firm Carlyle Group plans to announce on Wednesday a $ 4.1 billion line of credit for its holding companies that will tie the price of debt to the diversity of a company’s board of directors, the DealBook newsletter reports.
Carlyle did not disclose the rates associated with the loans. To help companies increase the diversity of recruitments, it will use its database of executives as well as those of partners such as Catalyst and the Association of Directors of Latino Companies.
The three-year facility, which the company says is the largest of its kind in the United States, is part of an “integrated approach to building better businesses,” Carlyle chief executive Kewsong Lee said.
The effort to use the tools of private equity to promote diversity initiatives is part of a larger trend of so-called environmental, social and governance investments as they turn to private capital in the stock markets. Debt issuance in sustainability efforts hits a record high of $ 732 billion in 2020, up 26% from the previous year.
The credit facility is an extension of Carlyle’s goal for boards of directors of companies in its portfolio to have a diversity rate of at least 30 percent by next year. Almost 90% of its companies now meet its 2016 goal of having at least one director who is female or an ethnic minority for companies in the United States or, for companies outside of the United States, a director who is female or an ethnic minority. is a woman.
Company Says Effort is Good for Business: In a study of its holding companies, Carlyle found that companies with two or more board members had 12% higher annual profit growth to that of those with fewer diversified directors.
Carlyle has arranged more than $ 6 billion in financing related to its ESG goals, including loans for the packaging company Logoplaste linked to the reduction of its emissions; the denim manufacturer Jeanologia, linked to water savings; and the gearbox manufacturer Flender, based on renewable energy capacity. The company estimates that it has saved more than $ 15 million through these deals.
