Sector developments and company hires

UK social bond debuts
Kensington is prepping its inaugural STS and what is believed to be the UK market’s first ESG RMBS. Dubbed Gemgarto 2021-1, the £472m transaction is labelled as a social bond and is backed by a pool of UK specialist prime, performing, first-ranking owner-occupied mortgages.

The loans are made to underserved borrowers with complex incomes and therefore contribute to the UN Sustainable Development Goals of ‘reduced inequality’ and ‘sustainable cities and communities’. The deal is aligned with the ICMA Social Bond Principles of 2020 and adheres to Kensington’s Social Bond Framework, which has received a second-party opinion from ISS ESG.

The transaction also features a four-year revolving period, during which excess available principle over the class A target notional amount can be used to purchase additional eligible mortgages originated by Kensington. A portion of the issuance proceeds will be used to refinance a £141.5m pool previously securitised in Finsbury Square 2018-1.

The lender has mandated Lloyds as arranger and joint lead manager, alongside BNP Paribas and NAB.

In other news…

Leadership transition, governance review underway
Apollo Global Management chair and ceo Leon Black is set to retire as ceo by 31 July and will be succeeded by Marc Rowan as ceo, but continue as Apollo’s chair. In addition, Apollo’s board will be expanded to include four new independent directors, while Apollo co-presidents Scott Kleinman and James Zelter have also been named to the board and will take on increased responsibility for the day-to-day operations of the company.

Concurrently, the board and the executive committee will evaluate new measures to further enhance Apollo’s corporate governance, many of which are expected to be differentiating in the alternative industry. They include moving to a ‘one share, one vote’ structure and empowering the board to oversee all aspects of the company. The board currently delegates much of the responsibility and legal authority for supervising the business to the executive committee.

These announcements follow the completion of an independent review of Black’s previous professional relationship with Jeffrey Epstein. At the company’s October board meeting, Black requested the conflicts committee to retain outside counsel to conduct the review, which was undertaken by Dechert.

Dechert’s review found, among other things, that: Apollo never retained Epstein for any services; Epstein never invested in any Apollo-managed funds; and advice Epstein provided to Black was vetted by professional advisors. Dechert also found no evidence that Black was involved in any way with Epstein’s criminal activities at any time.