White & Case Advises Societe Generale on US$3.4 Billion Impact Investment Risk Transfer

Global law firm White & Case LLP has advised Societe Generale on the issuance by a French securitisation vehicle Fonds commun de Titrisation (FCT) of balance sheet notes linked to a landmark US$3.4 billion impact investment risk transfer related to the Bank's diversified lending portfolio.

The transaction incorporates an innovative factor to incentivise additional Positive Impact Finance lending, and is the first significant risk transfer transaction to use an FCT structure under French law since May 2007. It was awarded Innovation of the Year and received an honourable mention in the Impact Deal of the Year category at the SCI Capital Relief Trades Awards 2019.

"We advised our long-standing client Societe Generale on a complex, first-of-its-kind transaction with Mariner that will incentivise additional Positive Impact Finance lending," said White & Case partner Ingrid York, who co-led the Firm's deal team. "The deal showcases our established strengths in synthetic securitisations and our innovative track record in critically important sustainable finance."

White & Case partner Grégoire Karila, who co-led the team, said: "This is a landmark deal in the sustainable finance field, using an FCT structure that shows the flexibility and robustness of French law for international structured finance transactions."

Mariner Investment Group (Mariner) has purchased a junior tranche of French law governed notes through its IIFC platform. The portfolio corresponds to more than 250 loans in over 40 countries around the world, with credits sourced from Societe Generale's leading structured finance franchise in a variety of sectors, including energy, infrastructure, shipping, aircraft, metals & mining, real estate, telecom and media & technology.

The transaction is one of the largest synthetic risk transfer for these asset classes and is also notable for an innovative capital allocation factor for Positive Impact Finance projects. Societe Generale has committed to dedicate 25 percent of the risk weighted asset reduction to spur new Positive Impact Finance over the next three years. By reallocating the released capital from the legacy loan book and dedicating it to enhance the capacity to finance new Positive Impact Finance projects, the parties aim to provide strong support for the United Nations Sustainable Development Goals.

Additionally, if Societe Generale is able to redeploy 50 percent of the risk weighted assets towards the Positive Impact Finance capital allocation factor by the fourth anniversary of the transaction, Mariner has agreed to a reduction in the coupon, creating a positive pricing incentive for additional Positive Impact Finance investment.

The White & Case team which advised on the transaction was led by partners Ingrid York (London) and Gregoire Karila (Paris), and included partners Stuart Willey, Peita Menon (both London), Dennis Heuer (Frankfurt), Ray Simon (New York), Alexandre Ippolito and Max Turner (both Paris), with support from counsel Emmanuel Lebaube (Paris) and Paul Harrington (London), and associates Charles Linel, Guillaume Keusch (both Paris) and Hui Hua (London).

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