Media Release

01 April 2026

RMB launches Africa’s First Nature-Linked Outcomes-Based Bond

Johannesburg, 1 April 2026 — Rand Merchant Bank (RMB) is proud to announce the successful financial structuring of the landmark Cape water performance-based bond transaction. The outcomes-based transaction structure will support The Nature Conservancy (TNC) South Africa, a nonprofit with established conservation programs, with implementing a conservation project to ecologically restore priority water catchment areas through the removal of invasive plants, thus increasing stream flow into storage dams (i.e. water reclamation).

The bulk of the funds for this conservation project has been raised through contributions from outcomes-based funders (OBFs) as part of the broader transaction structure. TNC South Africa is also bringing separate matching donor funding to support the project. The connection between the bond and the conservation project arises from the project outcome-based success payment mechanism, which links bond investors’ financial returns to the level of project success achieved.

The Cape water performance-based bond is the first capital-markets instrument issued by a commercial bank globally where investor outcomes are directly tied to verified ecological and environmental restoration outcomes.

RMB sees this transaction as the first step in establishing a replicable programme. Designed as the first in a series, this transaction creates a template to finance restoration of priority catchments across South Africa’s Strategic Water Source Areas (SWSAs) on a sustainable and scalable basis.

“This is a R2.5 billion market signal that natural capital has entered mainstream finance. The collaboration with TNC South Africa as project implementer, and the appointment of Conservation Alpha as independent design and technical agent, ensures that the Cape water performance-based bond transaction is not only financially innovative, but also scientifically rigorous, ecologically grounded, and globally benchmarked,” said RMB’s Martin Potgieter.

Securing South Africa’s Water Future

Louise Stafford, The Nature Conservancy (TNC), South Africa Country Director, said “The Cape water performance-based bond marks a pivotal moment in conservation finance. It moves us beyond short-term, project-based funding by creating a pathway toward sustained, long-term investment in nature. TNC South Africa has been a strategic partner in the development of this bond by providing science expertise, ecological and invasive alien plant management input that underpins the technical credibility of the project.”

The project targets the removal of invasive plants to restore priority catchments in the Western Cape Water Supply System by supporting the work of TNC-SA and the Greater Cape Town Water Fund for five years. The areas to be cleared are part of remote parts of  Boland Grootwinterhoek Strategic Water Source Area (SWSA), one of 22 SWSAs in South Africa. Studies have shown that removing invasive plants can increase waterflow at a fraction of the cost of other technologies, while the project focuses on the most productive water catchment areas. SWSAs make up only 10% of the country’s surface area delivering 60% of the country’s water and support two-thirds of our economic activity.

The bond enables sustained investment in restoring these critical landscapes, securing water supplies for people, and the economy in the Greater Cape Town Region.

“Clearly demonstrating what an investment has achieved is the backbone of impact finance. Investment returns in the Cape water performance-based bond rely on performance and so we require systems to independently verify results. This independence and transparency are critical to ensure trust in these results, and to scale nature-based impact finance products,” said Chris Barichievy, Director of Science at Conservation Alpha.

A Collaborative Effort

This transaction was a FirstRand group effort involving FirstRand Bank (as issuer, project agent, and conditional funding donor), RMB (as arranger, structurer and distributor), Ashburton Investments (as a bond investor) and the FirstRand Foundation as an anchor OBF and the coordinating public benefit organisation (PBO) in the structure.

Investor demand was led by the International Finance Corporation (IFC), FSD Africa Investments and Aluwani as co-anchors, with participation from Ashburton Investments, Eskom Pension and Provident Fund, Optimum Investment Group and Sanlam Life.

The FirstRand Foundation played a catalytic role in the transaction, committing R50 million over five years as an outcomes-based contribution to the transaction. Beyond its financial commitment, the FirstRand Foundation also acted as a coordinating anchor for other philanthropic partners, helping to align funding around a shared-outcomes framework and governance approach, and unlock private investment at scale while demonstrating how philanthropy can play a system-shaping role in advancing innovative climate and water resilience solutions.

The Development Bank of Southern Africa (DBSA) also committed R50 million as an outcomes-based funder for the project, aligned to its mandate to enable financial innovation in the green economy space and support the development of an instrument that is durable and can be scaled.

Other outcomes-based funding partners that contributed to the success of the transaction include Remgro, The Rupert Nature Foundation and the Lewis Foundation.

Key Features and Benefits:

• Performance-linked returns: Noteholder returns vary based on verified impact, supporting the successful clearing of hectares (that restores streamflow in our rivers).
• Mainstreaming natural capital: The deal signals that nature is becoming a differentiated, investable asset class for local asset managers and multinational institutions.
• Economic upliftment: The project creates meaningful green employment opportunities, particularly for rural communities, women, and youth.
• A national blueprint: This issuance is the first in a planned series intended to roll out across other important catchments in SA.
• Risk mitigation: The structure protects downside risk, allowing bond investors to retain the comfort of an investment-grade note while gaining exposure to a potential success premium.

ENDS