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Centrus advises TRIG on power price hedging for a UK solar portfolio

About TRIG

The Renewables Infrastructure Group (TRIG) was one of the first investment companies investing in renewable energy infrastructure projects listed on the London Stock Exchange.

TRIG completed its IPO in 2013 and is now a member of the FTSE-250 index with a market capitalisation of c.£2.8bn (Aug 2023). 

TRIG’s diversified portfolio includes onshore and offshore wind farms, solar parks, and flexible storage in the UK and Europe.


Transaction Overview

  • Centrus supported TRIG with the structuring, pricing and execution of power price hedging for a UK solar portfolio.
  • Centrus supported TRIG in implementing the hedging strategy that achieved all stakeholder objectives and retained future flexibility through an extremely volatile period during which a number of regulatory changes occurred.
  • Through utilizing a Pay-as-Produced financial hedge structure across a range of tenors, Centrus helped TRIG to  enhance their risk management.


Centrus Solution

  • Support with assessing & determining initial hedging trade level.
  • Initial market soundings for appetite & high-level feedback around structure & timing.
  • Coordination of Non-Disclosure Agreements with counterparties.
  • Feedback and negotiation with banks/providers to ensure competitive tension.
  • Support with final steps to onboarding and counterparty set up.
  • Coordination of power hedging protocol.
  • Independent check of market rates during dry runs and execution call.
  • Investigation of any discrepancies identified during process.
  • Participation and coordination of dry run and live execution exercises.
  • Review of trade confirmations for accuracy post execution.

“Centrus advised us throughout each stage of the power price hedging process and we benefitted from their extensive market knowledge and expertise to ensure a successful outcome was reached. 

We look forward to working with Centrus again in the future.“

Phil George, CFO – TRIG 

“We are delighted to have supported TRIG on this important transaction for their solar portfolio. Centrus were able to assist in engaging a range of counterparties who were able to act throughout the various stages of the energy crisis and provide various products.”

Mark Taheny, Director – Centrus

For more information, please contact Mark Taheny

Centrus advises V&F Homes on financing of affordable homes portfolio

About V & F Homes

V&F Homes, a provider of social housing, has financed its affordable homes portfolio with Secure Trust Bank. 

The portfolio, consisting of 34 properties in East Anglia made up of shared ownership and affordable rental homes, purpose built to help first time buyers get on the housing ladder, has received a bespoke investment facility to fund further growth. 


Centrus Solution

Centrus acted as advisor and arranger for V&F Homes, running the process to find a suitable debt funder for a smaller sized, specialist portfolio. 

Despite it being a difficult time to enter the market due to continuing interest rate increases, Centrus negotiated with Secure Trust (including going beyond some of their internal limits) to ensure the deal worked for both sides. 

A total of C.£1.4m debt raised was secured against the housing assets. 


Added Benefits

The Loan, which has a term of five years, required specialist knowledge in this area of real estate finance, given the suite of properties is designated as affordable housing and shared ownership properties.

With previous experience in structuring these tailored loans and flexible lending, STB was able to navigate this specialist area of real estate finance to give V&F Homes a facility that allowed them to purchase and expand the portfolio.

“Centrus tabled three prospective lenders, helped us select the best option and then guided both parties through the process in a professional and friendly manner.”

Charles Vaughan, Director – V&F 

“It was a pleasure to work with V&F and STB on this transaction. All parties worked pragmatically towards a solution in a volatile interest rate environment to ensure V&F can continue its growth and provide more high-quality affordable homes in its local area.”

Lawrence Gill, Director – Centrus

For more information, please contact Lawrence Gill

Centrus advises Finerge on c.€1.6bn Hedge Restructure

About Finerge

As Portugal’s second largest renewable energy producer, Finerge has worked to provide access to more sustainable energy sources to the world for over 25 years.

Finerge operates 70 Wind Farms and 17 PV solar plants located in more than 47 Municipalities across Portugal and 3 provinces in Spain. 

Day and night, more than 770 turbines harness the energy of the Wind and thousands of photovoltaic modules that collect energy from the sun. 

All this means that more than 1,176ktons of CO2 emissions are avoided.


Transaction Overview

Centrus worked with Finerge to develop an appropriate hedging strategy to optimise their debt restructure and refinancing transaction from a risk management perspective including:

  • Options appraisal and Market Analysis
  • Pre-Hedging
  • Restructuring
  • Novations and Terminations
  • Reprofiling

This resulted in an optimised restructure that met the client’s objectives, managed associated risks effectively and was delivered in a timely manner through a fair and transparent process.


Centrus Support

  • Assisted in identifying appropriate hedging instruments & implementation strategies
  • Supported in sourcing & negotiating competitive, fair & transparent pricing 
  • Assisted in the commercial negotiation & execution of financing & hedging documents
  • Assisted in executing the strategy with relevant counterparties 
  • Ran quantitative analysis to support the recommendation of the optimal hedging strategy
  • Independent check of market rates during dry-runs & execution calls
  • Investigated any discrepancies identified during process
  • Participated & coordinated dry-runs & execution exercises
  • Review of trade confirmations for commercial accuracy post execution

“Centrus supported us through every step of the process, implementing effective hedging strategies to support our restructure. Their advice was always transparent and they helped us understand the crucial effects of each step. Our experience with Centrus was commendable and we wouldn’t hesitate to work with them again.”

Eduardo Camino, CGO – Finerge

“Working with Finerge on such an important transaction for the company was a pleasure. Centrus was happy to be able to assist in implementing an effective hedging and pre-hedging strategy in an extremely volatile interest rate market. It was no small feat but everyone involved from the banks to the client were pivotal in making it a successful transaction.”

Mark Taheny, Senior Director – Centrus

For more information, please contact Mark Taheny

Centrus arranges £56m debt refinancing for Funding Affordable Homes

Transaction Overview

Funding Affordable Homes (FAH), a social impact fund which invests in UK affordable housing, has completed a £56 million debt refinancing, reducing its interest payments by more than half.

FAH’s portfolio comprises 768 existing homes across 10 schemes, valued at £135 million, offering affordable homes to up to 1,300 people across the UK. It’s real estate and investment adviser, Edmond de Rothschild Real Estate Investment Management (EdR REIM), intends to grow the portfolio to more than £500 million, delivering up to 3,000 affordable homes across the UK. EdR REIM benefits from an experienced, specialist residential team and its broader vertically-integrated residential platform, which also includes private rental strategies across the UK.


Our Role

Centrus acted as advisor and arranger to FAH on the refinancing which involved: 

  • Developing a financial model for the business and the transaction.
  • Working with FAH and their legal counsel to develop a suitable funding structure for the business.
  • Engaging with potential lenders to discuss structuring options to ensure we could align FAH’s requirements with lender preferences.
  • Running a roadshow process to find the most competitive funding.
  • Negotiating with lenders to agree a final term sheet.
  • Driving the transaction through to closing, requiring detailed legal and structuring work throughout the documentation process.


Outcome

  • FAH has secured a £56 million, 20-year facility from a European bank, replacing nine existing facilities provided by three lenders, including Barclays and Secure Trust Bank. 
  • FAH’s loan portfolio is greatly simplified, both reducing the number of lenders and complexity of the lending within the group
  • The transaction removed expensive development facilities which were not fit-for-purpose for stabilised assets.
  • The interest rate on the new facility is based on an inflation-linked gilt rate, aligned with FAH’s inflation-linked rents.

“This refinancing is a significant milestone for FAH, more than halving our previous cost of debt and providing a stable base from which to raise and deploy equity. In a challenging financing market, Centrus’ deep market knowledge and advice was central to securing the new facility, which now enables us to move forward, focusing on delivering more, much needed affordable homes across the UK”.

Adrian D’Enrico, Fund Manager – FAH

“We are pleased to have supported Funding Affordable Homes in arranging funding so key to its long-term strategy, supporting objectives to deliver more affordable homes and social impact. The successful outcome of this refinancing project has provided FAH with a strong foundation and greater flexibility in the future”.

Lawrence Gill, Director – Centrus

For more information, please contact Lawrence Gill, Director at Centrus.

Centrus arranges a £100m sustainability-linked RCF and £110m of private placement facilities for VIVID

About VIVID

VIVID is a leading provider of affordable homes and manages 34,000 homes for 74,000 people across Hampshire, Surrey, Berkshire and West Sussex. When VIVID formed in 2017 they were determined to increase the supply of new homes. 

In 2022-23 VIVID built 1,390 new homes, making them the sixth largest developer of new homes amongst housing associations in England.


Transaction Overview

In April 2023, Centrus acted as advisor to VIVID on a new £100m Sustainability Linked Facility from ABN AMRO. The facility is unsecured and has metrics linked to VIVID’s environmental, social and governance (ESG) work, helping incentivise a positive impact for VIVID’s customers and communities.

In July 2023, Centrus also supported VIVID in arranging two private placements with a combined value of £110m. The unsecured shelf facilities were agreed with North American funds and accounts managed by Sun Life Capital Management and Pacific Life. The Pacific Life shelf facility is for £60m and the Sun Life Capital Management clients’ for £50m. 


Centrus Solution

Centrus advised VIVID throughout the process, identifying banking partners who were able to provide the flexibility, relationship and breadth of products that VIVID require for future growth. 

Access to this funding will enable VIVID to draw funds as and when needed to help achieve its desire to increase the supply of energy efficient, affordable homes. 

“We’re really excited to be developing new relationships with European and North American investors: ABN AMRO, Sun Life and Pacific Life. By agreeing these facilities we’ll be able to access funds with greater agility. This will provide additional liquidity to the group. 

I am grateful for the support and advice from the team at Centrus in arranging these facilities.”

Jonathan Roberts, Group Treasurer – VIVID 

“We are delighted to have supported VIVID by arranging these facilities. These transactions represent the start of new relationships between VIVID and these 3 institutions, helping further diversify and enhance VIVID’s already significant lender base.” 

Scott Douglas, Director – Centrus

For more information, please contact Scott Douglas

Centrus arranges a €60m Private Placement for Impax Environmental Markets plc

Transaction Overview

Launched in 2002, Impax Environmental Markets plc (“IEM”) is the UK’s largest environmental investment trust.

IEM’s objective is to deliver long term capital growth by investing in companies offering solutions to environmental challenges, particularly clean energy, water treatment and pollution control, waste technology, natural resource management and sustainable food. 

IEM has announced the successful issue of €60m privately placed notes (the “Notes”), providing the Company with an element of long-term structural debt as part of its investment strategy.


Centrus Solution

IEM has agreed to issue the Notes to funds managed by Pricoa Private Capital (part of PGIM, Inc) in three tranches as follows:

  • €20m maturing on 1 September 2030 with a floating coupon of Euribor + 1.35%;
  • €30m maturing on 1 September 2033 with a fixed coupon of 4.48%; and
  • €10m maturing on 1 September 2035 with a fixed coupon of 4.63%.

Centrus acted as arranger of the issue of the Notes, advising on the structure of the transaction, drafting an investor presentation and arranging meetings with a selected group of institutional investors.

The funding date is expected to be 1 September 2023 and the proceeds of the financing will be used to repay outstanding bank debt of $32.2m and £25m.


Outcome

The three unusual features of  IEM’s private placement are as follows:

Currency –  IEM raised Euros rather than sterling or US dollars. IEM’s assets are denominated predominantly in US$ but also with a substantial holding in Euros. Looking at £,$ and € interest levels are significantly lower in € and the decision was taken to borrow in the lowest coupon currency at the time with a substantial holding of Euro denominated investments.

Maturity – The board was reluctant to lock into current coupon levels for a long period. Consequently, the financing was structured with three tranches of 7, 10 and 12 years providing some certainty of financing but deliberately spreading the refinancing risk.

Fixed/Floating – The 7 year tranche was swapped by Pricoa into floating rate. The reason for this was that IEM’s board took the view that interest rates are likely to fall within the next 2 years, so the company will benefit as and when this occurs. In addition, the credit spread IEM has achieved is very competitive compared with bank financing.

“Using structural debt with the aim of enhancing returns for shareholders is a key advantage of the investment trust structure. This financing provides attractive long-term debt capital to be deployed for the benefit of shareholders for many years to come and comes at a time when the Board and the Manager believe that portfolio valuation makes gearing desirable”.

Glen Suarez, Chair – IEM

“Against a backdrop of volatile conditions in both global equity and debt markets, we are delighted to have worked with IEM to conclude a successful institutional financing. 

One of the unusual features of this private placement was the 7 year floating rate tranche which was provided by the investor at a very competitive credit spread. Our expectation is that other investment trusts will be tempted to follow IEM’s lead, raising floating rate debt from the institutional market”

Robert St John – Centrus

For more information, please contact Robert St John

Consortium acts as financial adviser to Ofgem on the £1.14bn transfer of offshore wind farm transmission assets

The Square Smith Partners’ consortium acted as financial adviser to Ofgem on the £1.14bn completed transfer of Hornsea Two offshore wind farm transmission link from Ørsted to Diamond Transmission Partners

On 14 July, 2023 Ofgem announced its confirmation to grant an Offshore transmission licence to Diamond Transmission Partners Hornsea Two Limited. This sees the transfer of the £1.14bn offshore transmission link from Ørsted A/S, the developer of the Hornsea Two offshore wind farm, to a Diamond Transmission Partners entity owned by Mitsubishi Corporation and the London listed Infrastructure fund, HICL Infrastructure PLC.

The Hornsea Two wind farm consists of 165 turbines, has a capacity of 1,320MW and is located 89km from the Yorkshire coast. The associated transmission assets were acquired for £1.14bn, representing the largest asset by value sold under Ofgem’s Offshore Transmission Owner (OFTO) regime.

In addition, Ofgem announced yesterday that, four bidders have prequalified for Tender Round 10 (TR10) which has 3 OFTO assets with a combined asset value of over £2billion. The Invitation to Tender (ITT) for the first of the assets in this round, the Dogger Bank A transmission link with an estimated value of c. £1bn, is expected to be launched in early August.

The Square Smith Partners’ Consortium has been advising Ofgem in relation to sales of offshore wind farm transmission assets since 2020 when it was first appointed by Ofgem for TR7 and is currently advising on Tender Rounds TR7, TR8, TR9 and TR10 which together relate to the transmission assets for seven offshore wind farms with a projected generation capacity of 6.7 GW and combined asset values of c. £5.2bn.

The Consortium comprises financial advisers Centrus and Square Smith Partners, with CEPA providing financial and related economic advice, tax advice provided by BDO and forensic cost reviews provided by Grant Thornton.

“Offshore Windfarms are playing a critical role in the UK’s transition to renewable energy and Net Zero targets. It is a fantastic for Centrus and our consortium colleagues to play their part in closing out this important deal and its contribution to energy transition”.

Adam MacDonald, Managing Director – Centrus

For more information, please contact Adam MacDonald.

Centrus advises Pennon on acquisition of four solar PV projects and co-located battery storage

Transaction Overview

  • Pennon is a FTSE 250 London-listed utility, providing clean and wastewater services across Southwest England.
  • Pennon is committed to reducing operational carbon emissions and is targeting 50% of its energy demand to be supplied by renewable energy sources.
  • Pennon acquired four fully-consented ready-to-build solar PV farms with a  combined capacity of 144MWp (99MWac) across the UK from two developers in separate transactions.
  • The investment includes one co-located 2-hour battery energy storage system with 30MW / 60MWh installed capacity.

Centrus Role

Centrus acted as both the financial and commercial advisor to Pennon which included:

  • Identifying strategic acquisition opportunities for Pennon Plc.
  • Financial valuation modelling for solar and co-located battery.
  • Commercial negotiations from drafting of NBO to financial close.
  • Assessing different PPA and BESS optimiser strategies.
  • Coordination of stakeholders and process towards a successful close in an efficient and timely manner.
  • Embedded team acting as an extended arm of Pennon.

Outcome

  • Centrus successfully supported Pennon in financially valuing transactions to achieve required internal returns and placing Pennon ahead of the competition to obtain exclusivity.
  • Achieved close on 4 fully consented ready-to-build solar PV farms and one co-located BESS.
  • Developed a bespoke solar and battery model which underpinned Pennon’s commercial strategy.

“Centrus has been an integral and highly valued part of our project evaluation and acquisition team. Their technical and commercial skills have been central in ensuring that we have identified the right assets and have had a plan to build out and commercialise those assets on the right terms.”

Peter Rayner, CDO – Pennon Group Plc

“Delighted to support Pennon accelerate their goal to Net Zero through the acquisition of four UK solar projects and one co-located battery enabling them to significantly address the energy and sustainability challenges faced by the water sector”.

David Craig, Director – Centrus

For more information, please contact David Craig.

Centrus arranges £150m 10-12-year Private Placement for HICL Infrastructure PLC

Transaction Overview

Managed by InfraRed Capital Partners, HICL is a FTSE 250, London-listed UK investment company that seeks to offer investors stable, sustainable long-term returns from investments in core infrastructure. 

HICL has successfully raised long-term finance via a £150m Private Placement at a weighted average interest rate after hedging of 5.75%.

The funds raised will be used to reduce the existing drawings on the Group’s RCF.

Certainty over the effective interest rate of the Private Placement was achieved through execution of a pre-hedge strategy using a gilt-lock.

Centrus Role

Centrus acted as financial advisor and sole arranger to HICL:

  • The transaction leveraged our understanding of the market to engage a select pool of prospective investors, ultimately leading to the private placement being more than four times oversubscribed.
  • Centrus advised and led on the execution of a pre-hedge strategy to provide certainty to stakeholders on the underlying gilt rate prior to PP pricing.
  • We supported management end-to-end including the interaction with the Fund’s RCF, acting as an extension of the HICL team to deliver a timely, competitive fund raise.

Added Value

  • HICL has achieved long-term financing at a highly competitive margin, reducing overall borrowing costs at a time of interest rate uncertainty.
  • The private placement provides greater certainty to stakeholders of HICL, locking in a stable source of funding at a consistent cost over a 10-12 year period.
  • Accessed a different source of funding to both the Bank RCF and equity markets.

“We are pleased to have worked with Centrus to diversify our capital sources and access long-term funding. Their market knowledge and experience was key in assisting us navigate the challenging financial environment and  helping us achieve our funding objectives”

Helen Price, CFO – InfraRed

“This is a great outcome for HICL and we are delighted to have helped the company successfully navigate the diversification of its funding sources and secure its first long term institutional debt facility at the fund level”

Geoff Knight, Executive Director – Centrus

For more information, please contact Geoff Knight.