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Absa part of largest REI4P borrower transaction yet with Enel Green Power
Absa was the joint mandated lead arranger, joint hedge bank, account bank and agent bank for the ZAR 17.26 billion deal for Enel Green Power South Africa that will see the construction and operation of five wind plants in the Northern Cape and Eastern Cape with a total capacity of 700 MW.
These projects were awarded under Round 4 of the South African Government’s Renewable Energy Independent Power Producer Procurement Programme (“REI4P”).
Enel Green Power operates in 29 countries, and entered the South African market by establishing local operations in 2011. Absa first worked with Enel on their successful Round 3 REIPPP and have continued to work closely together to deliver further innovative renewable energy funding solutions through the closing of these Round 4 financings.
Absa participated in the senior Jibar debt, senior CPI debt and BEE mezzanine debt for ZAR7.06bn and provided a debt service reserve facility for ZAR 283 million.
This landmark transaction features several firsts for the South African REI4P, including the use of a portfolio funding structure to finance all five projects, resulting in reduced credit risk to lenders and significantly improved pricing to the projects. It is also the largest single borrower transaction since the inception of the REI4P, and the first portfolio-based financing structure closed in Africa.
The projects support South Africa’s commitment to reduce carbon emissions in line with the country’s commitment to the 2015 Paris Accord, as well as supporting Government’s goal of diversifying energy resources and reducing dependence on coal, as outlined in the 2019 Energy Integrated Resource Plan.
Absa arranges finance for Mainstream Renewable Power for R6.6 billion wind farms project
Absa acted as the exclusive mandated lead arranger, hedge provider, account bank, guarantee provider and facility agent for two onshore windfarms that will add 250 MW of energy to the grid, as part of the South African Government’s Renewable Energy Independent Power Producer Procurement Programme.
The deals, worth approximately ZAR6.6 billion that closed in June 2018, made it possible for global renewable energy developer, Mainstream Renewable Power, to build the Kangnas (140 MW) and Perdekraal East (110 MW) wind farms. Owners include Lekela, OMLACSA, H1 Holdings, AREP and a local community trust.
These two new wind farms will help alleviate South Africa’s constrained energy environment using clean, renewable energy, it will create jobs in two locations where unemployment is particularly high, and will introduce water and electricity infrastructure into areas previously not connected to these vital resources.
Absa is committed and determined to support solutions that contribute towards a sustainable future and creates innovative finance solutions to make more renewable energy projects possible. For example, part of the debt in the capital structures was CPI-linked and the equity was back-ended - two pieces of financial engineering that set new standards in the market.
The deal team’s efficiency and strong execution meant that Absa managed to put the hedges in place and reach financial close earlier than the rest of the projects in the market, resulting in better economics for the deal and the equity partners being very happy with the final result.
This transaction further enhances Absa’s accreditations as a force in the local Power, Utilities and Infrastructure market and demonstrates Absa’s ability to provide a fully funded solution.
Absa with Nesa Solar power deal reduces Makro’s energy costs
Absa acted as the exclusive mandated lead arranger, hedge provider, account bank, guarantee provider and facility agent for two onshore windfarms that will add 250 MW of energy to the grid, as part of the South African Government’s Renewable Energy Independent Power Producer Procurement Programme.
Local renewable energy fund Nesa Investment Holdings recently acquired Makro's carport solar photovoltaic (PV) systems at stores countrywide. The acquisition, which was funded from capital raised from Nesa’s shareholders, with a debt facility provided by Absa Retail and Business Banking (RBB), will generate clean electricity that is fed directly into stores. This will allow these stores to reduce their total monthly electricity bills, and alleviate pressure on the national grid.
The portfolio, including Woodmead, Riversands, Carnival, Strubens Valley, Springfield and Silverlakes stores, has the capacity to generate 4.4 million kWh and offset 4 700 tonnes of CO2 emissions per year.
The transaction brings Nesa’s assets under management to R158 million across 40 sites in South Africa and positions the fund as a leading independent investor and operator of commercial and industrial scale renewable energy generation facilities.
“We cover the installation cost of the solar PV systems and maintenance over 20 years to ensure optimal performance, offering clients immediate savings in energy costs with zero capital expenditure,” said Peter Frolich, Nesa Investment Holdings director. The electricity generated is sold to Nesa’s clients at a discount to their current municipal tariffs, escalating annually at fixed rates and protecting against abnormal tariff hikes.
“More corporates are seeking alternative energy sources and Nesa is able to supply and operate appropriate solutions while guaranteeing a minimum quantity of energy.”
“Over the past decade, solar PV has become a very cost competitive solution,” said Justin Schmidt, Head of Renewable Energy RBB SA. “With power challenges facing the economy, the renewable energy sector plays a vital role in providing additional energy security to the grid.”
Nesa’s installed generation capacity is expected to almost double to more than 11 MWp by the end of 2019 with over 20 additional solar PV sites at various stages of completion across South Africa