NORD/LB behind hybrid project financing transaction for the first time in Europe
NORD/LB Norddeutsche Landesbank has implemented a hybrid project financing transaction for renewable energies for the first time in Europe. This involved a structured bank loan in combination with long-term funds furnished by institutional investors. The financing enabled the acquisition of an operating wind power project in Ireland by leading developer and wind farm operator Gaelectric. Comprised of 16 turbines manufactured by Enercon (based in Aurich) with an overall capacity of 46 MW, the wind farm is located in County Kerry.
The project financing volume amounts to almost EUR 60 million, made up of a fixed rate note with a maturity of 19 years and six months as well as a shorter-maturity structured bank loan. This innovative structure combines the flexibility of a project financing transaction in line with standard banking practice with the long maturity of institutional funds. In the role of structuring bank and mandated lead arranger, NORD/LB acted in cooperation with Australian company Hastings Funds Management. Hastings contributed EUR 26 million of institution funds to the financing transaction via a fund in its asset management portfolio.
The innovative structure shows that it is possible to place financing transactions for medium scale projects in the sphere of renewable energies with institutional investors. NORD/LB plans to advance and refine this model, emphasizes Eckhard Forst, member of the NORD/LB Managing Board: "This hybrid financing transaction underlines NORD/LB's capacity for innovation. We are planning to intensify our cooperation with institutional investors in the future and thus soon be able to finance larger-volume projects than up to now for the European market."
NORD/LB Media and Communication