Saturday, 16 February 2019

EMEA Awards

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Read a detailed, free-to-view write-up of each Award winner

To see the full digital edition of the PFI Yearbook 2015, please click here .

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European Bank of the Year

BNP Paribas

The French bank bounced back in 2014 with an impressive year across the globe in terms of lending and advisory mandates. In terms of lending in the Europe, Middle East & Africa region, it actually topped the EMEA project finance lending league tables for the first three quarters of 2014. Globally it was third. But what is as impressive is its list of advisory deals closed, both in EMEA and globally.

In Europe, its two advisory closings were the €3bn bank/bond refinancing of 2i Rete Gas in Italy and the €650m Georges Besse II uranium enrichment facility for Areva’s Tricastin plan in south-east France. In the Americas, it worked on the US$1bn Los Ramones Sur gas pipeline in Mexico and the US$877m financing of the gas-fired CCGT Oregon Clean Energy plant in the US north-east. It also advised on the US$411m bond backing the Abengoa Transmision Sur financing in Peru.

In Asia-Pacific, it advised on one of the main transactions of the year, the US$7.2bn Roy Hill mining deal in Australia. It advised on the US$643m Nam Ngiep hydro deal in Laos and on the US$1bn bond issue that backed Tenaga’s 3A power deal in Malaysia.

Back home in Europe, the Avera deal was a stand-out as the first limited recourse financing of a nuclear related asset. In Poland, the bank was heavily involved in the DCT Gdansk port financing, which has refinanced existing debt and provided capex for new facilities. It was involved in two of the larger deals in the region – Star Refinery in Turkey and the Safi IPP in Morocco. And, as to be expected, it had a strong year in the oil and gas reserve-based lending (RBL) arena. One of its main deals was the US$3bn Det Norske RBL to back the company’s acquisition of the Marathon assets off Norway.

European Power Deal of the Year


The 600MW Gemini offshore wind project financing in the Netherlands was the stand-out offshore wind financing in Europe this year. The project raised €2bn in debt – twice the size of the previous record for a European offshore deal – Globaltech. The project financing included the wind farm itself and the grid connection from the site, 85km offshore from the Dutch coast.

The project had been around since 2010, when it was successful in bidding for the Dutch SDE support regime. It was in August 2013, however, when the Canadian developer Northland Power came on board by buying a 60% stake, that the project development and financing accelerated. The deal was formally launched to the debt markets on November 1 2013. By May this year, it had reached financial close.

The financing has a mix of public and private debt sources split 50/50. On the public side, the European Investment Bank plus export credit agencies EKF, Euler Hermes and OND joined the deal. This still left €1bn in 17-year bank debt to be raised. The mandated leads were ABN AMRO, BNP Paribas, BTMU, Deutsche, EDC, Natixis and SMBC, plus Bank of Montreal, CIBC, BNG, Santander and CaixaBank. All-in average pricing on the deal was 4.75% with the commercial loan margins set at 275bp to 300bp.

Siemens Project Ventures and Van Oord had been involved in the scheme from the early days and took 20% and 10% equity stakes in the project, respectively. The other sponsor is HVC, which has 10%.

Green Giraffe Energy Bankers was the financial adviser on the project. Allen & Overy advised the lenders on the deal, while Freshfields advised the EIB. Clifford Chance and Linklaters advised the sponsors. The deal represents the first major development for Northland in Europe and it has since bought into the Nordsee offshore wind farm scheme in Germany and launched that deal into the loan markets.

European Refinancing of the Year

Budapest Airport

There have been plenty of refinancings in the infrastructure space over the last few years – and this year the most complex was the €1.4bn Budapest Airport deal. While well regarded as a standalone asset – Canadian pension fund PSP bought 49% of the airport from Hochtief in May 2013 as part of a bigger airport sale – the project had its issues as its loan refinancing deadline loomed. Hungarian state airline Malev had gone down in 2012 and the airport took time to recover from the blow, CEE markets were out of favour with the capital markets and the mark-to-market swap was €280m in the red.

The refinancing involved deleveraging the senior debt by putting in place a new €300m subdebt piece priced at 13.5% and then putting a new €1.1bn five-year loan in place with pricing starting at 300bp. The deal minimised the need for new equity to €50m of the subdebt and did not disturb the existing agreements with the Hungarian government on the deal on the airport’s concession terms, including a debt guarantee. Indeed, the refinancing required 100% of the exiting lenders to transfer their debt rather than receiving a cash refinancing. The €770m notional interest rate swaps were extended to match the liabilities of the new debt facilities to ensure 75% of the facilities were hedged.

Leading players in the deal included Rothschild, which was the financial adviser; Deutsche Bank, which worked across the senior, junior and subdebt; SG and SMBC, senior documentation banks; UniCredit and K&H, key local banks; Park Square and Macquarie, anchor investors on the subdebt; and BNP Paribas, which co-ordinated the swap execution process. Clifford Chance and Linklaters advised the sponsors and White & Case advised the lenders. Other banks in the lending group included BBVA, Credit Agricole, EDC, HSH Nordbank, ING, KBC, Natixis, RBC and Siemens.

European Infrastructure Deal of the Year

Mersey Gateway

The Mersey Gateway bridge project has been pursued by a local council, Halton Borough Council, since 1990 as a scheme to relieve congestion in the Mersey Tunnel and to promote local economic growth. While in many cases taking nearly a quarter of a century to get a project to financial close might seem to be failure in project management, in this case it was a success – particularly as few local authorities in the UK have the ambition to pursue a £645m project largely on their own. The project, in its final run-in, survived the comprehensive spending review post-2010 that killed off many other infra projects in the UK.

The scheme features a number of innovations. The deal has been split between a project co-design, build, finance and operate concession and a contract to run the toll collection services. The project financing is backed by an availability payment mechanism. The projectco is paid its availability-based payment from two sources – the Department of Transport-backed availability grant to the council and from the collection of tolls. In theory, if toll collection does not go well, the scheme could suffer. However, the UK government has given extra support to the scheme by providing a backstop to Halton’s payment obligations to the projectco.

In financing terms, the deal was unique. It combined commercial bank finance, a useful adoption of the UK’s government’s debt guarantee programme, UKGS, via a bond issue, a mezzanine tranche from Macquarie and a loan from Korea Finance Corporation during construction to the council to back its obligations.

The project sponsors are Macquarie (financial adviser), Bilfinger and FCC, with Sanef as tolling partner. The construction joint venture is made up of FCC, Samsung and Kier. KPMG and DLA Piper advised the council. Ashurst was legal adviser to the sponsors, Freshfields to the senior lenders and A&O to the junior lenders. Lloyds, SMBC, KfW IPEX and Credit Agricole provided the bank loan. HSBC was lead arranger for the bond.

European PPP Deal of the Year


The financial close in the spring of the €550m availability-based road PPP near Galway heralded Ireland’s return to the European project finance market. It was the first large-scale project to be financed following the country’s sovereign debt crisis and subsequent EU bailout, and brought in international commercial banks and institutional investors while challenges still remained in the market.

With most European banks now eyeing all the remaining deals in the current pipeline and Ireland’s sovereign rating restored to investment-grade, the N17/N18 is being seen as a pathfinder out of the cold and a template for squeezing institutional investors into Ireland’s smaller ticket deals.

Building on strong support from the EIB, which took half the senior debt, financial adviser to the PPP company SG brought in Aviva’s infrastructure fund and Natixis along with Natixis’s institutional investor partner Ageas. Natixis also sold a share of its debt to ING’s insurance fund around the time of financial close, putting three institutions on the debt side.

Natixis acted as mandated lead arranger and hedging bank, and brought, alongside the initial two institutional investors, a €118m contribution to the total €331m financing through a 27-year fixed-rate tranche. Debt pricing is lower than on the last road PPP to close, the N11, which came in at about 400bp in May 2013, but it is not below 300bp.

Although it had been downgraded by Moody’s during the course of the deal, domestic lender Bank of Ireland took the smallest ticket. It is understood that the Irish contractors on the deal, Sisk and Lagan, did not see the bank’s liquidity as a major issue and were prepared to show confidence in Ireland’s broader recovery. Their confidence has paid off. Bank of Ireland, SG and Natixis also provided an equity bridge loan.

The support of sponsors Strabag, Marguerite Fund and InfraRed was also key, along with the fact that the EIB had done due diligence on the project. The client is the National Roads Authority, advised by the NDFA. A&L Goodbody advised the sponsor and McCann Fitzgerald is the legal adviser.

European Renewables Deal of the Year


The acquisition of a majority stake in Edison and EDF EN’s 594MW renewable power portfolio by infrastructure investor F2i combined project and corporate financing structures and innovative governance agreements to create Italy’s third largest wind power operator.

The deal, known as Edens or Eureka, marked a shift from individual wind asset financings towards sophisticated portfolio financings. It also broke new ground in the evolving relationship between industrial operators and financial investors in the renewables industry.

F2i’s €320m acquisition of a 70% stake was backed by a €245m debt package provided by ING, Intesa Sanpaolo, Santander, Societe Generale, and UniCredit. The loan includes a €215m acquisition facility, for 66% leverage on the acquisition price, and a €30m debt service reserve facility. The debt amortises over nine years and is priced at 500bp, stepping up to 550bp. The loan is provided to an F2i-owned holding company, maintaining the Edens opco debt-free and operationally more flexible. The debt includes an innovative mix of covenants for this reason.

The relationship between F2i and Edison/EDF EN, which kept the remaining 30% stake, is also defined by a series of interesting governance agreements. Edison provided a 10-year fixed-price off-take agreement and a 10-year O&M service agreement, taking the bulk of the price and operational risks. It also maintained operational control over the asset, consolidating the wind portfolio’s results. F2i retained significant control over the assets through veto rights and other cross-checks. It also structured the deal as a partnership aimed at actively managing the assets and seeking to grow the portfolio, rather than simply making a long-term passive investment.

Edison and EDF were advised by Lazard, Morgan Stanley, Clifford Chance and Paul Hastings. F2i was advised by Intesa Sanpaolo, Chiomenti, Fichtner, KPMG and Marsh. Bonelli Erede Pappalardo advised the lenders.

European Road Deal of the Year


The EIB’s project bond credit enhancement (PBCE) product has become a mainstay in the European infrastructure market this year with the closing of a number of projects. One PBCE deal in particular was remarkable because of its features: the financing of the A7 motorway PPP in Germany.

The A3-rated deal was closed in August by a consortium of Hochtief PPP Solutions, Dutch Infrastructure Fund (DIF) and KEMNA. The group won the project after a two-year tender run by road procuring authority DEGES. Financial adviser Societe Generale and Credit Agricole were the joint lead arrangers and joint lead managers, as well as lenders.

The availability-based road PPP had a total financing requirement of €700m and was funded with a mix of project bonds and loans. The main tranche is the €429m of senior secured project bonds with a 29-year maturity and 2.957% all-in pricing, which was provided by seven institutional investors. The bond issue is enhanced by a €86m PBCE subordinated loan. The other sources of financing are an €82m revolving milestone bridge facility for €245m of aggregate drawings and €50m of equity.

The deal was relevant for several reasons. It was the first project bond issue in Germany, and the first PBCE deal in the country. Unlike other project bonds placed with only one or two investors, the A7 transaction brought together seven bond buyers from various jurisdictions, including Axa IM, Babson Capital, Aegon, ING IM, Sun Life, the EIB and KfW. The bonds were privately placed and unlisted. It also allowed the sponsors to obtain very competitively priced debt, at below 3%. Other interesting features are the use of the PBCE only for the construction phase and the co-existence of bank loans and bonds.

The project entails the design, building, and finance of the widening of a 65km stretch of the A7 north of Hamburg from four to six and eight lanes, and the operation and maintenance of a 59km section. The PPP contract will last 30 years, including four years for construction.

Deutsche Bank was the project agent, security trustee, paying agent and account bank. Freshfields Bruckhaus Deringer was the sponsors’ legal adviser and White & Case advised the lenders.

European Industrial Deal of the Year

Georges Besse II

Non-recourse project finance deals in the nuclear industry are extremely rare, and deals focusing on upstream nuclear businesses even more so. Areva’s project Niagara – a €650m hybrid debt financing to fund the French nuclear company’s Georges Besse II enrichment plant – stood out this year as a surprising transaction with a very innovative and complex structure.

The plant is a key facility for Areva’s business. After its completion it will supply 70 nuclear reactors worldwide run by off-takers from France, the rest of Europe, Asia and the US.

The financing was led by advisers BNP Paribas and UniCredit, which were joined by eight more lenders: BBVA, BTMU, CIC, Credit Agricole, HSBC, Natixis, Santander and Societe Generale.

The amortising loan has a tenor of 10 years and is structured in a single floating-rate tranche, without hedging. The debt is priced starting slightly below 200bp over Euribor and increasing to slightly above 200bp later on through two step-ups in June 2016 and June 2019. The financing has a conservative structure, with leverage of only 15%–20% of debt against 80%–85% of equity – the opposite of a standard project finance deal.

The list of unusual features for a project finance deal continues. The financing is secured on the off-take contracts rather than the physical assets, which could not be pledged due to regulatory restrictions to protect uranium enrichment secrets. There is a cash pooling scheme to allow the plant to pool its cash with other Areva group entities. The borrower is Areva’s subsidiary Société d’Enrichissement du Tricastin (SET), which is a fully fledged operational company rather than an empty special purpose vehicle.

Yet the structure of the deal based on the asset’s cashflows ticks many of the boxes of a project finance transaction. At difficult times for the nuclear industry in general and Areva in particular, it is remarkable that the deal got done with such an array of innovative features.

The other shareholders of the plant are GDF Suez (5%), Japanese utilities Kansai (2.5%), Kyushu Electric Power (1%) and Tohoku Electric Power (1%), and South Korean utility Korea Hydro & Nuclear Power – KHNP (2.5%).

Allen & Overy advised Areva on the deal and Herbert Smith Freehills advised the lenders.

Middle East & Africa Bank of the Year

Standard Bank

Instead of looking at the deals Standard Bank has financed this year, it would probably be easier to compile a list of those it hasn’t. On the power side at least, it is hard to find a bank that has dominated in the same way with mandates from east to west and north to south of the Sub-Saharan project finance market. From its home market of South Africa, where the renewables programme has taken off, it has moved into neighbouring Mozambique and Namibia to secure big ticket arranging roles while growing its portfolio in the key markets of Kenya in the east and Nigeria and Ghana in the west.

Standard features on both the African IPPs winning awards this year – Kenya’s 310MW Lake Turkana wind farm and Ghana’s 350MW Cenpower gas-fired IPP. It took €25m on Turkana in the EIB B-loan and US$100m on the commercial bank ECIC facility on Cenpower. Closer to home in Mozambique, Standard provided over US$170m in total debt for the 118MW Gigawatt gas-fired IPP, one of the first IPPs in the country. It underwrote the entire transaction and provided a bridge structure to allow MIGA cover, an ECIC tranche and DFI funding at a later stage.

In the oil and gas sector, Standard took US$75m and its Stanbic arm the same on the Seplat US$1.7bn refinancing in the second half of the year. The bank was the only lender to participate in all three components of the refinancing, using its presence in Lagos and London to play a strategic security agent role. The deal provided Seplat with access to local and international debt pools and includes an accordion feature to support future acquisitions by the firm.

A final deal of note was the Petredec LPG storage facility in Mauritius, the largest of its kind in sub-Saharan Africa. The total project cost was US$42m and Standard provided a US$28m five-year loan. While the African market can be difficult to judge by the amount of deals that have closed, a quick look at the number of arranger role and advisory mandates and 2014 seems to be a sign of things to come for the bank and the continent.

Middle East & Africa Refinery Deal of the Year

Star Rafineri

The Star Rafineri deal, at US$3.29bn, was the largest oil and gas project financing in the EMEA region this year. In some ways, it was a classic old-style project financing – a mix of export credit agency (ECA) and commercial bank debt in an emerging market, backing the construction of an important and strategic new economic asset.

In other ways, it was a new and challenging transaction. There is no completion guarantee on the deal, a key objective for the sponsors. The project has a limited security package due to the fact that the sponsors are owned by the Azerbaijan government and there are no long-term off-take agreements on most of the production from the plant. That said, the deal was not as ambitious as the financing originally sent out to the banks for comments in 2012, with the debt/equity split narrowed and the sweet/sour ratio between commercial bank debt and ECA covered debt tweaked.

The deal is key for Turkish/Azeri political and economic relations. The sponsors are Azeri state oil company Socar and the Azeri state oil fund, Sofaz. The 10m tpa plant will produce high-value diesel and jet fuel products for the Turkish market and supply naphtha to the Socar linked Petkim petrochemical business.

UniCredit was the financial adviser to the scheme, with Vinson & Elkins advising the sponsor and Allen & Overy advising the lenders. Greengate advised the ECAs. Sixteen commercial banks joined the deal – Banco Popular, BBVA, BNP Paribas, BTMU, Credit Agricole, Deutsche Bank, ING, Intesa, La Caixa, KfW IPEX, Korea Development Bank, Natixis, Santander, SG and UniCredit, plus Turkey Garanti and EDC, which supplied a 15-year, US$500m uncovered bank tranche.

The ECA bank tranches were covered by Cecse, K-Sure, Nexi and Sace, and the ECA direct loans came from US Ex-Im and JBIC. Bank roles on the deal were: BTMU, docs and JBIC bank; BBVA, Cesce agent; Natixis, Coface agent; ING the K-Sure agent, Intesa the Sace agent; BNP Paribas the US Ex-Im agent; and UniCredit is the intercreditor agent.

Middle East & Africa Industrial Deal of the Year

Wa’ad Al Shamal

The US$7.5bn Wa’ad Al Shamal, Northern Promise, integrated phosphate project in Saudi Arabia is a world-scale project aimed at boosting the Kingdom’s economic prospects. The scheme will produce 3.5m tpa of finished phosphate a year and is being built at the Wa’ad Al-Shamal Minerals Industrial City in the north and the Ras Al Khair Minerals Industrial City on the east coast.

The project is being developed by state mining company Ma’aden, which has developed a range of large-scale industrial schemes over the last decade – many of which have been significant project finance deals. Project partners on this scheme are state petrochemical company Sabic and US phosphate company Mosaic.

The financing does not have a completion guarantee, as is Ma’aden’s style, but has a time-limited debt service undertaking (DSU). EPC contracts on the scheme were awarded to China Huanqiu, SNC Lavalin/Sinopec and Hanwha E&C, plus Daelim Industrial and Intecsa. There are marketing agreements on the off-take, which will be sold mainly into India and the rest of Asia.

It is believed that pricing on the dollar tranches of the financing came in at 190bp all-in compared with 170bp for the Saudi riyal tranche. This was lower than the Emal 2 aluminium smelter expansion deal from 2013, a benchmark for Ma’aden, but higher than Aramco’s Sadara petrochemical deal.

HSBC was the financial adviser on the deal. Allen & Overy acted for the lenders and Baker & McKenzie acted for the sponsors. The US$5.25bn 17-year project financing included US$2bn from the Public Investment Fund (PIF), a Kexim tranche of US$775m – with a US$600m direct loan and a US$175m covered facility – a US$400m K Sure covered tranche, US$500m of dollar funding from international banks, and US$2bn of local Islamic funding split between a wakala and a procurement facility.

BNP Paribas and SMBC took US$150m of the dollar funding tranche with EDC and Apricorp taking US$350m. These banks plus HSBC, KfW IPEX, Mizuho and BTMU took part in the Kexim/K Sure-covered tranches. The rest of the deal is in riyals, with the funds coming from Al Rajhi, Alinma, Saudi Fransi, Riyad, Samba, NCB, Saudi British and Saudi Investment Bank, plus Saudi Industrial Development Fund (SIDF) and PIF.

Middle East & Africa Bond Deal of the Year


The Tamar project bond backing the 31.25% interest of Delek Drilling and Avner Oil Exploration in the Tamar gas field was, at US$2bn, the largest project bond issue across the world this year. The debut bond issue was split into five US$400m bullet tranches maturing in two-yearly intervals from 2016 to 2025. Such was the popularity of the issue that each tranche was at least five times oversubscribed with orders for the whole deal reaching US$11bn. Pricing, as a result, tightened by 50bp from initial guidance and ranged from 2.8% up to 5.4%.

Citigroup, JP Morgan and HSBC led the deal. CIB, Natixis, SG, Leader, Excellence, Barak, Menora, Leumi and Clal were involved too. The tranching structure has allowed the scheme to get a BBB– rating from S&P and Baa3 from Moody’s. The bond is backed by a range of 15 to 17-year long-term gas contracts but these are flexible. The gas field is now producing.

A US$900m project finance loan on the Tamar scheme was closed in the summer of 2012. The bond issue refinanced the loan and provided more cash. The banks that provided the debt were Barclays, HSBC, Citigroup, Credit Agricole, Nedbank, Mizrahi, Leumi, Natixis, Discount Bank, SG, and ING. The project loan in turned refinanced a bridge financing provided by Barclays and HSBC. The sponsors are planning a similar approach on the interests in the larger Leviathan field.

Simpson Thacher & Bartlett advised the lead managers on the deal and Davis Polk advised the sponsors. Allen & Overy and Shearman & Sterling were involved too.

Tamar is a strategically important energy asset to Israel and is a world-class hydrocarbon reservoir. As such, the deal proved popular with international investors. But by the time the deal got to the international debt capital markets, a lot of work had been done on the financial structuring of the deal. And, of course, on the asset itself.

Middle East Power Deal of the Year


Acwapower reached financial close on its 950MW gas-fired Kirikkale independent power project (IPP) near Ankara towards the end of the year, nearly two years after the deal was first signed in with its lenders. The scheme had to overcome the administration of its local project partner – the reason for the delay as the project sought new regulatory approvals – plus a softening of the power market in the country and an increase in size from 810MW to 950MW. That said, the deal represents the first limited-resource financing for a power project in the country, albeit with some important sponsor support in the early days.

Acwapower now holds 90% of the equity and EPC contractor Samsung has 10%. The US$1bn project has obtained a US$670m project finance package mixing multilateral, conventional and Islamic financing, with the deal running for 16 years.

The transaction is described as the first significant limited-recourse merchant power deal in the country. There will be some sponsor support on the project during operation, up to US$25m pa during the first five years. No off-takers have yet been signed by the plant but by the time the scheme is in operation some medium-term three to five-year contracts should be in place. Lenders got comfortable with the deal on the basis that there is a good EPC contractor, the sponsor support package and the debt/equity ratio, plus a view on the potential of the Turkish market.

The main selling point of the deal is that it will be much cheaper than other gas-fired plants in the country, up to 25%. Alstom is supplying the turbines and these are more efficient than on the original deal, hence the increase in the plant’s capacity to 950MW.

The EBRD provided a US$200m A loan, with Saudi Fransi taking a US$50m EBRD B loan. Fransi provided a US$100m murabaha Islamic financing in addition. The IFC provided a US$125m A loan, with Korea Development Bank taking a US$45m IFC B loan. Kexim and Standard Chartered provided US$90m and US$60m respectively, both covered by Kexim. Norton Rose Fulbright advised the sponsor and Allen & Overy advised the lenders.

North African Power Deal of the Year


The Safi independent power project (IPP) in Morocco was a classic old-style emerging market project financing with long-term power purchase agreements (PPAs), a mix of export credit agency (ECA) debt and covered debt, an international collection of sponsors in one project vehicle and a long gestation period to boot. At US$2.6bn, the deal was one of the largest around the world this year.

The 1,350MW scheme is coal-fired but will use ultra supercritical technology. Of course, large coal-fired schemes are nothing new to Morocco. The first Jorf Lasfar scheme was financed in the mid-1990s and then expanded in 2013, but Safi had to overcome a unique set of issues. It was first launched to the market in 2006 and took four years to get to its first bid stage in March 2010. In the meantime, the global financial crisis (GFC) had arrived and what seemed a challenge to finance now became a significant hurdle.

The old International Power won the deal and, given the financing constraints, bought in Mitsui as a co-sponsor, alongside local sponsor Nareva. Mitsui could bring in valuable JBIC and Japanese bank support. However, while the financing had a real Japanese flavour, the French banks came in – despite the long tenor. To lessen the tenor risks, which after the GFC were a headache, the PPA was structured in euros as well as US dollars. In addition, the deal included an istisna Islamic financing with a wakala arrangement.

BTMU, BNP Paribas, Credit Agricole, Mizuho, SG, Standard Chartered, SMBC and Sumitomo Trust were the international banks on the deal. Significant domestic funding came from Attijariwafa and BCP, and Nexi, JBIC and Islamic Development Bank provided the multilateral support. Clifford Chance advised the sponsors and Linklaters advised the lenders, with Mott MacDonald and JLT Speciality involved too.

African Renewables Deal of the Year

Lake Turkana

The 310MW Lake Turkana wind farm is the largest single wind power project to be constructed in Africa and the largest private investment to-date in the history of Kenya, but it has had a time-and-a-half getting there. First conceived in 2006 when Dutch farmer Willem Dolleman approached Anset Africa, later sponsor KP&P Africa, with the idea for a wind farm, the major turning point came when Aldwych joined the project team in 2009 and a PPA was signed soon after with Kenya Power.

The first and biggest obstacle to the project, located in Loyangalani District, Marsabit West County, came when the World Bank’s MIGA dropped out in 2012, leaving the project without the necessary guarantees to secure debt financing. The African Development Bank later came in to fill the gap with its first-ever partial risk guarantee covering the risk of delay to construction of the 450km transmission line being built by Kenyan national grid firm Ketraco. The project capex is €625m (US$783m).

Debt financing was signed in March this year by the African Development Bank (AfDB), the European Investment Bank (EIB), Standard Bank of South Africa, Nedbank, FMO, Proparco, the East African Development Bank, PTA Bank, EKF, Triodos and DEG. The AfDB also provided a €115m loan. Tenors are 15 years and pricing is said to be around 475bp on a 70/30 debt to equity split.

The sponsor consortium comprises, alongside local firm KP&P Africa and Aldwych International as co-developers, Industrial Fund for Developing Countries, Vestas, Finnish Fund for Industrial Cooperation, and Norwegian Investment Fund for Developing Countries. The project will produce more than 15% of Kenya’s currently installed capacity at €7.52 cents/kWh (Ksh9/kWh) on a 20-year PPA with completion due in early 2017.

Trinity International was the lenders’ adviser. Walker Kontos provided local legal advice. Allen & Overy was legal adviser to the sponsors, with Anjarwalla & Khanna in place locally. Consultancy DNV GL is advising on the 420kV AC overhead export line and associated substations. Mott MacDonald is the lenders’ technical adviser.

African Power Deal of the Year


Cenpower’s 350MW Kpone project, the country’s first greenfield IPP to use project finance and one of Africa’s largest IPPs to be financed this year, was signed in October after more than 10 years in development. It is a pathfinder deal not just for Ghana, where international developers are now lining up the next large-scale IPPs, but also for Sub-Saharan Africa – where political uncertainty and gas supply issues still cloud the horizon.

Indeed, both politics and gas supply issues had to be overcome by the mostly African-owned sponsor team here too. The former arrived late in the deal, when the IMF came in to assist government after the local currency plummeted 30% over the year. Equity investors were not put off, however. Original shareholder InfraCo sold its 24% share to Sumitomo, the Japanese investor’s first thermal IPP investment in Africa. Local company Cenpower and lead developer AFC also sold down stakes, making way for AIIM and FMO a few weeks before signing. On the issue of gas supply, the tri-fuel plant was designed to run on light cycle oil, distillate and gas. It will all run on LCO for first few years but as soon as gas becomes available there will be a strong incentive to switch based on security of supply.

The founding shareholders are Ghanaians, with 67% of the equity held by African entities; the construction company, Group Five, is African and 83% of the senior debt is issued by African lenders with the African commercial banks involved providing about 70% of the total debt. The total capex is US$900m with a debt/equity split of 70/30.

There is a commercial debt tranche led by Rand Merchant Bank (RMB) for US$426m and a development finance tranche led by FMO for US$225m. The tenor is 15 years door-to-door. The commercial tranche is backed by South Africa’s Export Credit Insurance Corporation (ECIC), which provides insurance cover in its single largest transaction. Standard Bank took US$100m, Nedbank took US$125m and RMB took the remaining US$200m.

The plant is located near the Atlantic Ocean, adjacent to the West African Gas Pipeline, close to all main interconnections, a planned 330kV transmission corridor and a 161kV major substation. It will increase installed dependable generation capacity by 13% in 2017 generating 2,700GWh per year of electricity to the national grid and providing supply for approximately 1m households.

Greengate was financial adviser to the sponsor. Trinity was the sponsor’s lawyer. Clifford Chance was the lender’s lawyer and Mott MacDonald was the lender’s technical adviser.










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