The JSE welcomes Africa’s first nature-linked performance-based bond

The Johannesburg Stock Exchange (JSE) marks a milestone in sustainable financing with the listing of Africa’s first Nature-Linked Performance-Based Bond, the FirstRand Bank Cape Water Performance-Based Bond (FR31PB). The performance‑based bond is part of a broader transaction structure which supports The Nature Conservancy (TNC) South Africa, a nonprofit organisation with established conservation programmes, in delivering a project that restores priority water catchment areas by removing invasive plant species, thereby increasing water flows into storage dams.

The R2.5 billion issuance links part of investors’ returns to independently verified ecological restoration. This marks a significant advance in the role capital markets play in supporting nature and water security.

“We are proud to have issued this innovative performance-based bond as part of the broader Cape water invasive plant removal project transaction structure. One of our key objectives was to make nature an investable asset class and build a natural capital market in South Africa that accommodates diverse participants, crowding in new pools of both local and international investors, alongside additional outcomes-based funders, and aligning the interests of all stakeholders in the value chain. The group’s corporate and investment bank, RMB, were instrumental in the structuring and execution of this transaction, and the FirstRand Foundation also played a key role as an anchor outcomes-based funder and coordinator for other philanthropic partners.

“This bond represents another significant milestone in the longstanding partnership between FirstRand and the IFC. The IFC’s investment was essential to achieve the target bond size, enabling the overall transaction. We are also pleased to have collaborated with FSD Africa, an African DFI, in their first South African listed debt capital markets investment. Strong support and early commitment from Aluwani Capital Partners, a South African asset manager, also enabled the successful conclusion of the book build,” said Bhulesh Singh, FirstRand Group Treasurer.

Head: Trading at the JSE, Helina Andhee said, “Linking part of investors’ returns to independently verified ecological outcomes shows how listed instruments can be used to finance nature‑based solutions. This bond illustrates how capital markets can align financial performance with measurable environmental impact.”

“By listing this bond,” explained Andhee, “the JSE offers investors a market‑based mechanism to support an environmental project that mitigates climate‑related water risk, while aligning returns with long‑term water security outcomes.”

Strategic Water Source Areas (SWSA) make up about 10% of South Africa’s land but supply 60% its water and support two-thirds of its economic activity. This shows why ongoing investment in these areas is so important.

The Cape water performance-based bond brings together FirstRand Bank as issuer and RMB as arranger and structurer. A coalition of local and international investors and philanthropic funders also participates. Institutions, including the International Finance Corporation, a member of the World Bank Group, FSD Africa Investments and Aluwani, have acted as co-anchor investors. South African asset managers and pension funds have also taken part.

Performance-based financial products are investment tools in which returns depend on achieving specific, verified outcomes. The JSE sees this listing as a key step toward building a local market for nature-linked, performance-based financial products. It shows how listed debt can be structured to support environmental goals while still offering the features of an investment-grade note, such as reliable repayment.