Contact

Archives: Credential

Post Type Description

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.

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