Investec Power Finance. Solar Energy UK. Large-scale Solar Finance and Maximising your RoI

Transcription

1 Investec Power Finance Solar Energy UK Large-scale Solar Finance and Maximising your RoI From start to finish: Construction finance and fundraising for new solar farms 8 October 2013

2 Disclaimer This document and any attachments (including any that accompanies it) is for information purposes only and does not constitute an offer or commitment, a solicitation of an offer or commitment, or any advice or recommendation, to conclude any transaction (whether described in this document or otherwise). This document does not constitute an offering document and does not purport to contain all of the information that an interested party or purchaser may desire. The terms of the proposed transaction described herein are consequently subject to change without notice. This document contains an indicative summary of, and is subject to, the fully legally binding terms and conditions of any final documentation and accordingly is not intended to be taken as forming the basis of any contract between the interested party and ourselves. The right is expressly reserved by Investec, in its sole and absolute discretion, to amend or terminate the process at any stage, as also are the rights to a) deal with one or more parties to the exclusion of others, enter into a special arrangement with any party or enter in to a binding agreement with any party without notifying other prospective purchasers, b) terminate any discussions that may be entered into with an interested party and/or c) evaluate the terms and conditions of any proposal as they wish and to reject all or any proposals without providing any reasons for such rejection. In no such circumstances will Investec be responsible for any costs and expenses incurred in connection with the preparation and submission of offers, or for any other costs and expenses incurred by prospective investors in connection with any proposed offer. None of Investec Bank plc nor any of its affiliates (together, Investec ) makes any representation or warranty as to the fairness, accuracy, adequacy or completeness of the information, the assumptions on which it is based, the reasonableness of any projections or forecasts contained herein or any further information supplied, or the suitability of any investment for your purpose. Investec has no responsibility for any loss, damage or other results arising from your reliance on this information. We are acting solely in the capacity of an arm s length counterparty and not in the capacity of your financial advisor or fiduciary. Investec Bank plc whose registered office is at 2 Gresham Street, London EC2V 7QP is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, registered no

3 Contents 1. An Introduction to Investec 2. Our Solar Track Record 3. Financing the Construction of UK Solar Farms What are the Options? 3

4 1. Introduction to Investec

5 Introduction to Investec Key features of Investec Group (March 2013): Core market coverage: Europe, North America, Australia and New Zealand, Southern Africa Over 8,000 people in the group Total shareholders equity 4.0bn Operating profit before tax 393m Third party assets under management 113bn Key features of Investec Bank plc (March 2013): 4.0bn Market Capitalisation 21.1bn Total Assets 16.3% Capital adequacy ratio 11.0x Total assets to equity Baa3 Moody s long -term deposit rating Client / relationship focused Not all things to all people Sector Specialisation Strength & flexibility 5

6 Three Distinct Business Activities Focused on Well Defined Target Clients Corporate / Institutional / Government Private Client (High Net Worth / High Income) Asset Management Specialist Banking Wealth & Investment Provides Investment Management Services Provides a broad range of services: Advisory Transactional banking Lending Treasury and trading Investment activities Provides Investment Management Services and independent financial advice 6

7 Power & Infrastructure Finance Our teams Integrated team of over 50 people globally Multi-disciplinary team of bankers, engineers, developers and lawyers Offices in London, Dublin, Johannesburg, Sydney & Toronto Representation in New York, Hong Kong, Beijing, Mumbai August 2013 August 2013 Sector expertise Public infrastructure (eg. school, prisons, hospitals, etc.) Transport infrastructure (eg. rail, ports etc.) Power & renewables (conventional, wind, solar, biomass and waste) Evermore Biomass CHP 15.8MW United Kingdom 40m Sole MLA Peaker Trust / GDF Suez Gas Turbine Peaking Plants 1,005MW South Africa R9.7bn Joint MLA Services and products Independent bid advice (financial structuring, debt raising, ratings) Financial modelling and valuation Funding across the capital structure (senior, junior, equity) using balance sheet or capital markets (bonds) Integration of multilateral funding (e.g. ECA, EIB etc) Advice on acquisition, refinancing, restructuring and sale of completed projects Development activities in the power sector in our own name in selected geographies May 2013 Good Energy Onshore Wind Farm 8.2MW United Kingdom 12m Sole MLA & Senior Lender November 2012 Western Wind Energy Wind / Solar PV 120MW / 30MW United States US$25m Senior Lender The team is highly experienced in the renewables space having lent to, advised on and/or developed renewable energy projects for over a decade

8 2. Investec Solar Track Record

9 A long standing track record in the solar sector Investec have built a significant experience over the years across a number of international markets We have acted as junior lender, senior lender, and have also provided panel financing We have provided construction financing and funded both ground mounted and rooftop solar projects 2008 March 2010 October 2010 November 2011 January 2012 June 2013 Project Sunshine Solar PV 13.4MWp Germany Bright Green Solar PV Park 10MWp Italy Winch Energy Solar PV Park 9.6MWp Italy Gusanitos Solar Project Solar PV 3.5MW Spain Global Solar Fund Solar Park 7.6MW Italy Sishen PV Solar PV 74MW South Africa Mandated to arrange a subordinated loan towards a portfolio of German land and roof based PV projects including both thin film and crystalline technologies Mandated to arrange a senior debt facility to a UK/Italian solar developer for the construction of a portfolio of ten greenfield projects in Puglia, Italy Mandated to arrange senior debt facilities for the construction of ten 1MWp solar plants in Puglia, Italy Mandated to arrange senior funding to a solar PV plant in Cordoba, Spain towards the refinancing of construction of single axe tracker panels Mandated to arrange a senior debt facility to refinance some of the Sponsor s equity and vendor financing for ten operating dual axis tracker solar sites in Puglia, Italy Mandated to arrange financing for the construction and operation of a 319,500 crystalline solar panel farm located North-West of the town of Kathu 5m 33m 35m 10m 18m R2.3bn Sole Junior Debt MLA Sole MLA & Lender Sole MLA & Lender Sole MLA Sole MLA & Lender Joint MLA & Underwriter October 13 9

10 One of the main debt funders in the UK solar PV market Investec entered the UK market in 2011 and has been active since then We have funded residential rooftop and ground mounted portfolios, relying on Feed-in-tariff or ROCs We have provided construction financing and arranged refinancing by way of bond private placement July 2012 December August 2013 Undisclosed Rooftop Solar 7.9MWp United Kingdom Low Carbon Solar PV 23MW United Kingdom Westmill Solar Co-operative Solar PV 5MWp United Kingdom A Shade Greener Solar Rooftop Portfolio 75MWp United Kingdom Mandated to secure the sale of a portfolio of c. 2,100 UK residential rooftop PV systems relying on Feed-in-Tariff payments Mandated to arrange a Senior Secured facility to fund ground mounted solar parks. The transaction represents one of the first construction project financings of Renewable Obligation Certificate (ROC) based solar parks in the UK Mandated to arrange the acquisition financing for a community-owned solar PV project in Oxfordshire. Investec also arranged the refinancing by structuring a long term index-linked bond placed with Lancashire County Council Pension Fund Mandated to arrange a warehousing facility to fund a portfolio of 20,000 UK residential rooftop PV systems and to arrange this long term refinancing through a 100m bond placement to institutional investors 33m Sell-side Advisor Undisclosed Sole MLA & Placement Agent 12m Sole MLA & Placement Agent 25m revolving facility / 100m bond placement Sole MLA & Placement Agent October 13 10

11 3. Financing the Construction of UK Solar Farms: What are the options?

12 The Lender s perception of the UK Solar Market A fragmented market split between: A small number of well capitalised sponsors (eg. Lightsource/Octopus, Foresight) A large number of small developers with limited equity backing A growing number of parties looking at acquiring operational assets (eg. pension funds, infrastructure funds, renewable listed funds) Project returns are under pressure: Reduction in subsidies levels (ROCs, Feed-in-tariff) Significant increase in panel price due to the EU anti-dumping case Technology and construction cost savings reducing significantly Increase in long term interest rate As a result, the overall gains available in the development chain is shrinking: Development fees are lower Most gains are to be realised upon selling accredited operational projects In this context, construction financing is critical to developers seeking to maximise their returns October 13 12

13 Construction Financing Lender s Issues Construction Financing Who is in the game? Equity providers Great if you are in the position of being fully equity funded! Bond market Institutional investors are not prepared to take the construction risk (yet) Traditional project finance banks yes, if the right conditions are met Construction Debt Financing What is needed? Banks are more conservative than equity providers Equity is required The days where pf banks could fund 80%+ of the capex with large development fees are gone Standard Project Finance contractual arrangements: Good EPC contractor (track record / balance sheet) Long term PPA Interest Rate Hedging and a good sponsor! What can help? Having a pre-agreed sale with a well-known (and credit worthy) buyer Time Sponsors tend to forget that project financing is a time consuming form of art! October 13 13

14 Investec Where we stand at present Many sponsors do not necessarily appreciate the debt provider s consideration We have a track record in providing construction financing in the solar sector and if the right conditions are met we are prepared to do so again In the post-banking crisis, we see debt construction financing as a bridge whereby: The bank carries the construction risk Other providers of capital provide the de-risked, long term financing: In the form of debt (private placement to pension funds) In the form of competitive equity (pension fund, renewable listed funds) There are challenges This is a new world! Some of the solutions are mutually exclusive, hence sponsors may be forced to make a choice earlier than they may wish to Even when operational and accredited, the projects carry some risks! We remain optimistic about the market s ability to offer new solutions and are currently looking at transactions involving either form of such long term capital October 13 14

15 THANK YOU

16 Contact Details Olivier Fricot London Ian Dixon London Investec Bank plc 2 Gresham Street London EC2V 7QP 16