Frankfurt am Main, 27.04.2018
VentusVentures GmbH, Hamburg, raised a mezzanine facility on the level of its newly established holding company Windkontor GmbH & Co. KG. The funds were used to acquire own and third party wind projects, which are bundled as a portfolio under the holding company. The wind farm portfolio consists of three onshore wind farms with a total of 18 wind turbines and a total nominal output of 39.2 MW. Capcora, a consulting firm specialized on real assets, provided advice on the transaction as exclusively mandated financial advisor.
VentusVentures GmbH raised a double-digit million-euro mezzanine loan through its subsidiary Windkontor GmbH & Co. KG ("Windkontor"), which acts as the holding company ("HoldCo") of the three project companies.
The loan granted at HoldCo level in form of debt capital is subordinated to the project financings at SPV level, which have to be serviced first in the waterfall. The mezzanine position therefore results from the structural subordination to the (senior) project financings at SPV level.
The mezzanine loan with a term of approximately 13 years is aligned to the weighted remaining term of the feed-in tariff of the portfolio and will be fully amortized by the distributions of the project companies to the HoldCo. Since all projects have a fixed feed-in tariff for 20 years in accordance to the EEG directives in force at the time of commissioning and the existence of reliable real yield data, the forecasted distributions are highly predictable. Because wind is still subject to a certain degree of volatility, the repayment profile and other contractual parameters have been individually adjusted to the cash flow profile of the portfolio (so-called "sculpting"), allowing some flexibility in repayment in the event of extraordinary effects, such as weak wind years. A mutual coordinated financial model for the HoldCo and SPV level formed the basis.
Despite the subordination of the investment, the robust repayment profile combined with a low uncertainty due to the existing historical operating data and the diversification in the portfolio as well as regionally over several locations in southern and northern Germany lead to an attractive risk-return profile for the institutional investor which provided the mezzanine loan.
"Mezzanine financing in the renewable energy sector, especially in the form of HoldCo structures, is becoming increasingly popular with institutional investors. With currently comparatively low equity returns in Germany, the risk-return profile of mezzanine investments is sometimes better than the one of a pure equity investment. In some cases, investors can even achieve an equity return parity with a lower risk profile, "explains Alexander Enrique Kuhn, Managing Partner and responsible for energy and infrastructure at Capcora.
"We are pleased about the completion of this transaction and appreciate the professional and focused cooperation of all project participants. We believe that we can offer an interesting investment in the form of mezzanine capital for our new partner with the portfolio composition. All wind farms in the portfolio are remunerated according to the EEG and have a reliable track record. The diversification of wind turbine technology and locations reduces the investment risk.“, says Martin Heimes, Managing Director of VentusVentures and Windkontor.
Capcora advised VentusVentures on the commercial side in negotiating and structuring the mezzanine loan and in financial modeling. Together, the two companies are already planning to work on further projects.
VentusVentures GmbH offers a wide range of services along the renewable energy value chain. The implementation of projects by interlinking the energy sector, industry, residential building and mobility is of particular importance. The core competencies of the Hamburg-based company lie in the areas of financing and project management. www.ventusventures.com
Capcora is a consulting firm, specialized on real assets. Capcora procures equity, mezzanine and debt financing for energy and infrastructure projects, real estate, and medium sized companies. The focus is especially on mezzanine financing for the recapitalization of tied-up liquidity in operating assets as well as for bridge financing of developments and construction measures in the area of renewable energies (photovoltaics, onshore wind) and real estate through alternative financing sources. www.capcora.com