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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.

Centrus advises Magnavale on new financing

Company Overview

Founded in 2011 by Sadel Group, Magnavale owns and operates an integrated network of ‘Grade A’ cold storage facilities in key locations and within close proximity of blue-chip food companies.

Magnavale is the leading independent platform for temperature-controlled storage and value-added services -#2 in the UK and #5 in Europe (Pro Forma):

  • 314,000 total pallet capacity 
  • 78 million cubic sq. ft storage volume (including expansion and new development)

The company is well-positioned for embedded growth in its existing network as well as development of new automated facilities.

Transaction Overview

The UK’s leading pure-play temperature-controlled warehousing platform Magnavale, has secured a new £280m financing package.

The new debt is provided by banks and institutional lenders for a five-year period including extension options.

The new financing will be utilised to refinance existing debt and fund the growth pipeline including the fully-automated development at Easton.

Centrus’ Added Value

  • Strategic advice on partnership and financing options, leveraging Centrus’ knowledge base and experience of real estate banking & broader capital markets.
  • Utilised a network of relationships to drive competitive tension, leading and supporting with negotiations.
  • Assessment of appropriate hedging structures resulting in a deal-contingent interest rate swap being entered into that mitigated the risk of rising rates in a volatile market.
  • Dedicated support throughout the transaction to enable smooth execution and drive optimal result.
  • Introduced new institutional lending relationships that will enable the ambitious growth plans of the business.

“We are pleased to have successfully closed this financing despite the challenging market backdrop. This transaction is a testament to robust sector fundamentals and secular demand for cold storage. We have a high conviction in this sector, and given limited new fit-for-purpose supply, we are well-positioned to benefit from new market opportunities and deliver long-term growth for our platform.”

Andrew Lawrence, Director – Sadel Group

“We are delighted to have supported Magnavale on this financing. It will enable the development of best-in-class, mission-critical warehouses to ensure security of food supply and future-proof the food supply chain. We are sincerely thankful to Magnavale’s leadership for placing their trust in us to assist on this strategic transaction and look forward to our next assignment together.“

Omer Fazal, Senior Director – Centrus

For more information, please contact Omer Fazal.

Centrus arranges £60m of new funding for Bernicia

Transaction Overview

Bernicia is a leading social housing provider in North East England, managing over 14,000 properties and providing a home to over 60,000 residents. 

Working with Centrus through strategy and execution, Bernicia has secured two new RCFs totalling £60m. 

The transaction aimed to bolster and extend Bernicia’s liquidity and remove EBITDA-MRI covenants. 

Centrus solution

  • Centrus worked closely with Bernicia on the initial treasury strategy including advising on the structure, tenor, and covenants to be targeted on the new facilities. 
  • A market engagement process resulted in multiple funding offers from both new and existing lenders. 
  • The process increased competitive tension and helped to drive the best terms and pricing for Bernicia. 

Added Benefits

In addition to bolstering liquidity and removing EBITDA-MRI, the new funding also delivered a range of additional benefits, including enhanced corporate flexibility through improved permitted merger and on-lending limits. 

The new facilities also include lower margins than the existing RCFs which they replace, allowing Bernicia to reduce interest costs as well as reduce treasury risks. 

Taken altogether, the new funding enhances Bernicia’s treasury platform and supports the delivery of wider corporate objectives.

“We are delighted to have worked with Centrus on the arrangement of two new RCF facilities. The facilities will ensure that Bernicia’s strong levels of liquidity are maintained, with the removal of restrictive covenants and improved corporate controls supporting the modernisation of our treasury portfolio.”

Janette Longstaff, Executive Director, Finance – Bernicia

“Centrus is pleased to have arranged this funding for Bernicia. The competitive funding process, aided by Bernicia’s strong credit profile and presentation to potential lenders, resulted in very favourable terms that delivered on the key treasury objectives set at the outset, including removal of MRI.”

Paul Stevens, Managing Director – Centrus 

For more information, please contact Paul Stevens.

Centrus advises LHP on £30m ESG-linked RCF

Transaction Overview

Source: LHP

Lincolnshire based housing association LHP, who owns and manages over 12,000 homes, has arranged a £30m 7-year RCF with Danske Bank.

The facility also includes a 15-year term option, providing further flexibility. 

Centrus Role

Centrus collaborated closely with LHP to identify the key facility prerequisites, ensuring it would support in the fulfilment of LHP’s long-term goals.

Following this, Centrus ran a competitive process, engaging with 8 lenders. This process included:

  • Creation of lender presentation pack and facilitation of lender engagements
  • Term analysis and lender negotiation to enhance terms

This process resulted in Danske being identified as providing the best all-round solution.  

Centrus then supported LHP through the security and documentation process. 

Added Value

Securing the new facility with Danske has resulted in a number of benefits to LHP, including:

  • Maintaining LHP’s strong liquidity position 
  • Facilitating the removal of EBITDA MRI from LHP’s portfolio, significantly boosting capacity
  • Providing competitively priced funding, on both a drawn and undrawn basis
  • 15-year term option provides flexibility to increase facility longevity on a competitive basis, delaying any refinancing risk. 

“We are delighted to have worked with Centrus on the arrangement of the new RCF facility. The new facility as well as helping maintain our strong levels of liquidity, has helped facilitate the removal of restrictive covenants. This leaves LHP in a significantly stronger position to deliver our planned investment strategy and deliver better homes for our customers”

Kathryn Price, Executive Director of Finance – LHP

“We are pleased to have supported LHP during the fund-raising process. The facility has helped to unlock increased capacity that will ensure LHP are able to maintain high levels of investment in their stock. Centrus has been at the forefront of developing the RP market for ESG-linked funding, where the ability to reduce borrowing costs offers tangible benefits”

Tom Miller, Assistant Director – Centrus

For more information, please contact Tom Miller

Centrus advises Circle VHA on its first social housing development project

About Circle VHA

Source: Circle VHA

Circle VHA was set up in 2003 to provide high quality social and affordable housing to families and individuals in the Dublin area.

It now operates over 1,500 homes across Ireland, providing housing and management services to approved applicants on local authority housing waiting lists.

Transaction Overview

Circle VHA achieved a groundbreaking single facility covering construction finance and a 30-year long-term finance to deliver 47 apartments.

Centrus worked with Circle VHA to deliver financing for its first social housing development project comprising 47 apartments to be built on a Dublin City centre site. The ultimate financing solution brought together different lending teams within AIB (Real Estate & Corporate Banking) within a single ground breaking facility and first-of-its-kind security structure. 

Client Objectives

  • As an Approved Housing Body (charitable) borrower, Circle VHA’s core objective was to deliver much needed social housing and to do so with the associated project construction and development risks, appropriately ring-fenced from its day-to-day operations. 
  • Typically, SPV structures are used for development projects, however given the limitations presented by Circle VHA’s charitable status, this solution was not available. Therefore, the funding and risk management solutions brought by Centrus had to sit inside Circle VHA’s balance sheet. This presented a unique challenge that required significant structure work and collaboration with all key stakeholders.

Centrus Solution

  • Against the backdrop of a volatile economic environment, Centrus worked with Circle VHA to assess the economic risks facing the project and associated mitigating options. Rising interest rates create debt capacity constraints and the focus of the hedging strategy throughout was to provide debt capacity certainty for the refinance of the development facility. 
  • This analysis informed the ultimate strategy to forward fix the long-term interest rate (i.e. locking in the rate at which Circle VHA will borrow the long-term finance to repay the construction funding).  This gives both borrower and lender, debt capacity certainty for the long-term financing which will be used to repay the construction loan. 
  • Both the construction funding and the long-term funding were documented within a single facility agreement which required strategic commercial negotiation to ensure it was fit for purpose and met the sector specific circumstances of the deal, the needs of all stakeholders (CVHA, AIB, DCC, DHLG&H, Contractor). 
  • Centrus drew on in-depth understanding of stakeholder perspectives to negotiate a financing and hedging structure that met Circle VHA’s objectives and ultimately saw the development of 47 new homes get underway in late 2022. 

“Centrus was a great partner for us in this landmark project. The team brought both financing and risk management solutions to the table and worked tirelessly to get the deal over the line.

They brought a collaborative solution orientated approach to this project which was not without its challenges. They never lost sight of the ultimate objective of getting 47 homes built”

Colin Creedon, Finance Director – Circle VHA

“Great to see Circle VHA’s groundbreaking project reach first drawdown with AIB. The project is progressing very well and we are looking forward to seeing tenants in their homes in 2024.”

Gavin Friel, Director – Centrus

For more information, please contact Gavin Friel.

Centrus advises on a £650m Sustainability Linked RCF for HICL Infrastructure PLC

Transaction Overview

Source: HICL Infrastructure 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 renegotiated its revolving credit facility (“RCF”), used to support the acquisition of new investments. 

The new RCF is a £650m multi-currency facility that runs to 30 June 2026, with options to extend for up to two additional years. The RCF remains on the same margin of 165bps over SONIA. 

Centrus’ Role

Centrus acted as financial advisor to HICL, a role which included: 

  • Converting an accordion commitment to a term commitment, agreeing on allocations with all funders commercial negotiation of revised documentation. 
  • Coordination of the process towards a successful close in an efficient and timely manner. 

Outcome

The facility’s consortium of lenders includes Barclays, CIBC, ING, Lloyds, National Australia Bank, Royal Bank of Canada, Royal Bank of Scotland International and Sumitomo Mitsui Banking Corporation.

The RCF is a sustainability linked loan, incorporating defined sustainability targets where HICL incurs a premium or reduction to the interest charged on the RCF based on performance against Environmental, Social and Governance KPIs. 

Performance against these targets will be measured annually, with the cost of the RCF adjusted for the following year. Overall, the margin on the RCF can vary between 162bps and 168bps over SONIA.

“We are very pleased to have worked with Centrus to renegotiate our sustainability linked RCF. Their expert market knowledge and collaborative approach really helped us to achieve our funding objectives in what has been a very volatile economic environment” 

Helen Price, Chief Financial Officer – HICL PLC

“HICL has not only achieved a successful refinance, but has obtained a longer term commitment from its funders. This is a testament to the strength of the business, and the strong relationship it has with lending partners”

Mark Taheny, Senior Director – Centrus

For more information, please contact Mark Taheny, Senior Director at Centrus.

Centrus advises Portsmouth Water on £325m investment for first UK reservoir in 30 years

Transaction Overview 

Portsmouth Water has secured £325 million in investments to construct the first major new reservoir in the UK since the 1980s. 

Havant Thicket Reservoir is an environmentally led project that will play a key role in protecting internationally-rare chalk rivers, by providing additional water supplies and resilience to the South of England. As well as supplying a vital new source of water in the face of climate change and a rapidly growing population, the reservoir will offer a new green leisure facility for the local area. This will include a wetland, visitor centre and network of footpaths, cycle routes and bridleways.

Centrus’ Role

  • Centrus undertook a holistic capital structure review and supported Portsmouth Water in designing a financing plan to create a robust capital structure throughout the construction of the Havant Thicket Reservoir​. This included securing assurance regarding the likely impact of the financing plan on credit ratings.  
  • Centrus supported the business through a procurement process to secure competitively priced and structured capital to fully finance the investment; and 
  • Our team managed a consent process with creditors to ensure that the terms of the financing platform were adapted to cater for the structure of the regulatory support received from OFWAT, the company’s economic regulator.

Outcome 

The banks giving their support to the environmentally driven scheme include existing lenders ING, Lloyds, Nat West, and Siemens Bank. Portsmouth Water has also secured a £50m commitment from the UK Infrastructure Bank, in the first investment of its kind for the sector, and is issuing a new £75m CPI-linked bond guaranteed by Assured Guaranty and purchased by abrdn and Pension Insurance Corporation. This is in addition to the equity commitment of £150m that has been secured from shareholders and was announced last month.

More information about Havant Thicket Reservoir can be found here: https://havant-thicket-reservoir.uk.engagementhq.com/ 

“We are delighted to have secured the £325 million investment required to construct Havant Thicket Reservoir. This will be the first large scale water storage reservoir to be built in the UK since the 1980s. 

It will play a key role in protecting internationally important chalk rivers – the River Test and the River Itchen, by securing a new, sustainable source of water for the region. This is an exciting time for the project. We have recently taken a major step forward in awarding the main reservoir works contract and, with all capital and investment now secured, look forward to work progressing on site.” 

Bob Taylor, Chief Executive Officer – Portsmouth Water

“As a B Corporation, Centrus is passionate about delivering solutions for a sustainable future. We are pleased to have supported Portsmouth Water in securing funding for Havant Thicket Reservoir which will have a positive impact on both the local environment and community, embodying our ethos of ‘Finance with Purpose’” .

Geoff Knight, Managing Director – Centrus

For more information, please contact Geoff Knight, Managing Director at Centrus

Centrus arranges £70m private placement for University of Derby

Transaction Overview

 The University of Derby is an award-winning university, committed to delivering economic, social, and cultural prosperity to its 23,000 students. 

Following a competitive funding process, a £70m private placement was secured, featuring highly attractive, fixed rate, 35-year, terms. It is the University’s first debt capital markets issuance and was arranged by Centrus, who acted as corporate finance advisor.

The issuance will fund a new state of the art business school, a core part of the University’s long-term strategy. 

Structured with a 12-month deferred tranche, allowed the funding to match the project programme. Further, the funding incentivises the University’s commitment to social inclusion and equality. It does so by providing a discount if the target set by the University for reducing the attainment gap is achieved. 

“The new Business School is pivotal to our role as a civic university and the development of our city campus, enhancing the teaching and real-world learning experience for our students and staff.

Centrus, and Mills & Reeve, provided outstanding support through the process, contributing to the successful outcome achieved. We are delighted our new borrowing arrangements link to our inclusion and equality commitments, given these commitments to the University’s strategic agenda.” 

Craig Jones, Chief Financial and Commercial Officer – University of Derby

“It’s been a pleasure to have supported the University arrange funding so key to their long term-strategy. This excellent outcome was achieved against the backdrop of significantly volatile financial markets. A key element of the success obtained was a carefully targeted investor and credit positioning strategy, on which we worked closely with the University to develop and implement.

We see this transaction as part of a broader trend towards universities utilising debt financing for capital projects across the sector.” 

Phil Jenkins, Managing Director – Centrus

“We are delighted to have supported the University on its private placement. It was a pleasure to work with the University at every step in the transaction, providing help and advice throughout. It was also rewarding to work on a project that will have such a positive impact on the University, its students and staff, as well as the wider community in Derby.” 

Matthew Howling, Principal Associate – Mills & Reeve