- A 44MWp Concentrated Photo Voltaic Solar Plant in the Western Cape, South Africa has successfully been refinanced by its shareholders, Pele Green Energy (PGE), the Public Investment Corporation (PIC) and Touwsrivier Solar Community Trust, which represents the local community of Touwsrivier.
- The refinancing involved the delisting of a JSE listed Bond and converting the debt into a limited recourse Project Finance instrument.
The Refinancing Initiative was launched by the Ministry of Mineral Resources and Energy’s Independent Power Producers Office (IPPO) in October 2019, as one of the mechanisms to reduce the wholesale price of electricity. All IPPs contracted under the REIPPPP Bid Windows 1 to 3.5, a total of 64 projects, were invited to participate in this initiative. CPV1 was constructed as part of Round 1 of the South African Renewable Energy Independent Power Producers Procurement Program (“REIPPPP”).
In support of the IPPO initiative, the board of CPV1 led by majority shareholder Pele Green Energy initiated the refinance process in March 2021. This was followed by a competitive process to appoint lenders which resulted in some of the bond holders joining the new project finance structure alongside leading commercial banks. The project is now collectively financed by Investec (Initial MLA), Rand Merchant Bank (MLA), Stanlib, Mergence and Aluwani.
“We would like to congratulate the CPV1 project on reaching financial close on their recent re-financing agreement. To date, 13 IPP Projects have successfully applied to refinance their projects. The nominal savings to the consumer from the thirteen refinancing applications is significant, at just over R3.5 billion. We encourage all IPPs from these earlier bidding rounds to participate in this important initiative” says Mr Tshifhiwa Bernard Magoro, Head of the IPP Office.
Martin Meyer, Head of Power and Infrastructure Finance at Investec says, “acting as initial mandated lead arranger for the CPV1 refinancing concludes yet another milestone transaction executed in our partnership with PGE. We are honoured to have been able to walk this journey with Pele and look forward to further partnering with them as they build on their exciting renewable energy strategy.”
Commenting on the refinancing, Kabelo Rikhotso, Chief Investment Officer at the PIC said, “the PIC welcomes the successful conclusion of the refinancing process for CPV1. The refinancing has unlocked value for all the shareholders involved, especially for the beneficiaries of the Touwsrivier Solar Community Trust. It has improved the potential returns and significantly reduced risk over the life of the project. The proceeds will create an opportunity for further investment into the South African economy. We appreciate the opportunity to partner with all the shareholders in this project, all of whom are transformed at ownership and management levels – something that the PIC strongly advocates for.”
Judy Kobus, Co-Head Infrastructure Finance at Rand Merchant Bank (MLA) says, “the senior debt refinancing of CPV1 cements RMB’s relationship with Pele Green Energy as well as the other Sponsors and unlocks significant value for the stakeholders whilst giving a cost saving to South African energy consumers, a beneficial transaction for all.”
“we are particularly proud that CPV1 was the first REIPPPP project funded through a JSE listed bond, which brought great value at the time by opening a channel to debt funders whose mandate restricts them to listed investments. The Moody’s project bond rating and the listed nature of the bond financing was ahead of its time when the bond was initially listed. The successful migration away from a bond into a Project Finance structure was a novel and complex transaction which allowed our Investment and Funding team, led by Ronald Chindeka, to demonstrate our continued leadership in financial innovation and structuring, by navigating the DMRE’s refinance protocol guidelines alongside the JSE’s strict requirements. More importantly this refinancing has allowed us to unlock value for the South African consumer through a tariff reduction at a time when this is most needed. The project is also unique in that it is 100% South African owned of which 60% is black shareholding and 40% owned through government pension fund,” Gqi Raoleka, MD of lead sponsor Pele Green Energy concluded.
Author: Bryan Groenendaal