Global Bank of the Year – MUFG MUFG has had another stellar year in the global project finance asset class – topping the loan league tables, currently second in the bond lead manager tables, and finalising some high-profile advisory mandates. For this track record, it is named Bank of the Year.
MUFG’s strength as a loan house is well known. It currently tops the global PF loan tables and the regional Americas and Asia-Pacific subsets. It has actually dropped down the EMEA tables at the time of writing to the bottom of the top 10.
The bank’s strength in the bond tables has been helped by a strong presence in the New York private placement markets while its advisory mandates range from Australian infrastructure to UK wind and US airports.
MUFG has adopted a new one-platform approach that has enabled it to come up with an interesting concept of ambidextrous bankers “who can advise on and executive any form of financing, irrespective of product or sector”.
The bank said its new approach “blends the bank’s sector specialists, ranging from renewable energy and rail to aviation and housing, with its capital markets experts”.
“Overlaying this is a product-agnostic advisory service, creating a one-stop shop for clients, and an enhanced approach to financial sponsors, recognising the growing importance of this client segment in project finance,” it said.
The ambidextrous team is well resourced, with 80 professionals in London, 70 in the US and 179 in Asia-Pacific including 81 in Tokyo, 42 in Australia, 44 in Singapore and 12 in Hong Kong.
The UK offshore wind sector was a booming arena this year and MUFG advised on two out of the three mega greenfield or bluefield deals – Hornsea 1 and Triton Knoll.
The Hornsea 1 1,200MW deal involved raising £3.6bn in debt with £1.3bn in a private placement to institutional investors. MUFG co-led the fixed-rate and CPI tranches and took the highest ticket on the bank tranche, £200m, to show its commitment to the project.
MUFG was also sole adviser on Innogy’s 857MW, £1.75bn Triton Knoll scheme, the first of the three mega UK offshore wind deals to close this year.
In the US, the bank was involved in plenty of stand-out deals. It advised an international consortium on the LAX people mover deal involving the construction of a 2.25 mile elevated automated people mover (APM) under a 30-year concession with Los Angeles Airport.
The financing includes a US$270m construction facility and US$1.2bn of public activity bonds (PABs). And the bank backed the acquisition, as sole underwriter, of GE Capital EFS’s US$2.6bn project loan book via a US$2.1bn financing.
In Asia-Pacific the bank was involved in most things that moved. The Australian operation had a good year and advised on a range of refinancings combining local and Samurai debt.
The A$500m Sydney desalination deal involved just a Samurai tranche but the A$338m Hallet 4 wind farm deal included both Samurai and local bank debt.
Two more dual-currency deals are in the works but the A$400m greenfield Dundonnel wind deal is just in one currency. The US$547m Waikeria prison deal in New Zealand, another advisory mandate, was funded by international banks.
The MUFG global structured finance team is headed by Daisuke Bito and the global project finance team is headed by Tomoki Muto. The head of structured finance in Europe is Phillip Hall and in the Americas, Erik Codrington. The head of project finance in Asia & Oceania is Teck Wei Chong and in Australia, Geoff Daley.
Global Adviser of the Year – Societe Generale
Two years after winning the title of Global Adviser of the Year, Societe Generale returns to receive the award for the top financial adviser thanks to impressive work spanning different project finance sectors worldwide.
The French bank advised on US$32bn worth of projects that reached financial close in 2018, a remarkable US$9bn increase over the volume achieved in 2016, the last time it won the Adviser of the Year award. It advised on deals ranging from Canada to Australia, from pipelines to roads, to renewable energy projects.
Renewables were arguably the focus of Societe Generale’s advisory work in its core European markets in 2018, as it closed advisory mandates on large offshore wind farms such as the Borssele 3&4 project in the Netherlands – a pathfinder project for low-tariff offshore wind. Other important deals in the sector include the greenfield Seamade wind farm in Belgium, and the refinancing of the Dudgeon and Merkur projects in the UK and Germany, respectively.
Wind power project advisory is becoming increasingly important further from home too, as the bank builds up mandates in the booming Taiwan market and consolidates its position in Australia.
The €1.2bn Nachtigal hydroelectric plant in Cameroon was equally important as the largest power project finance deal in sub-Saharan Africa this year, and a scheme that promises to increase the country’s electricity production by 30%. SG advised the EDF-led sponsors on the deal.
Oil & gas and petrochemicals continue to be a cornerstone of SG’s advisory work. The French bank’s stand-out deal this year is the Trans Adriatic Pipeline (TAP) connecting Turkey with Italy via Greece and Albania, for which SG helped raise €3.7bn in project financing bringing together an impressive mix of development finance institutions, export credit agencies and commercial banks.
In the next year LNG will be a priority for the bank’s advisory team, which is working on massive projects such as the Mozambique LNG scheme and Driftwood LNG in the US, and in 2018 secured another advisory mandate for Goldboro LNG in Canada.
Infrastructure remains a key market for SG’s advisory work in Europe across motorway, rail, port, airport and social infrastructure projects. Financial advisory mandates closed in this sector focused on refinancing deals including the Bretagne-Pays-de-Loire high-speed rail and Paris Sud University PPP in France, Rotterdam World Gateway port in the Netherlands, and Bina-Istra motorway in Croatia.
The bank is now looking to expand transport advisory work beyond developed markets, securing advisory mandates for upcoming motorway projects in Africa alongside numerous projects in tried-and-tested European countries.
Riding a boom in the market for telecommunication infrastructure on the back of pioneering financing work in France across broadband projects, SG worked on the year’s largest broadband financing worldwide, for the Open Fiber high-speed internet network in Italy.
Advisory work at the bank is often carried out in connection with debt arranging work by the same teams. Olivier Musset is the global head of energy, Herve Le Corre is global head of infrastructure, and Stephanie Clement de Givry is global head of metals and mining.
Global Bond House of the Year – Citi
Citi has had a stand-out year in the global project bond market. At the time of writing it tops the league tables with nearly double the issuance volumes of its nearest competitor. Its deals cover the globe and include some landmark transactions from the year across both the developed and emerging markets.
The bank uses its entire structured finance platform to win and execute deals and this has paid off this year. It has delivered 144A and Reg-S bonds, 4a2 and LMA private placements, CLOs and securitisations, inflation-linked debt, M&A, commodity hedges, deal contingent hedges, rate hedges, tax equity, equity-margin loans, Fibra E deals plus syndication loans and, finally, export credit deals with an institutional investor twist.
The £3.6bn Hornsea deal in the UK provided an example of this platform-based approach yielding results. Citi was the co-financial adviser alongside MUFG and put together the £1.3bn private placement piece that included a £600m CPI-linked tranche. In addition, it underwrote a £800m export credit-backed tranche, half of which was sold to institutional investors and provided the CPI hedge.
A dual bank/bond structure was adopted in Mexico on the EVM 11 financing for EVM Energia and GE EFS on their 850MW gas-fired power project. The deal included US$469m of 4a2 notes, the largest 4a2 project bond issue for assets in Mexico, and a US$217m construction loan.
The multi-platform approach appeared again in the Western Renewables deal for Blackrock. While no bonds were involved, the financing includes back-leverage credit facilities, an equity margin loan and a deal contingent hedge.
Citi had two notable bond deals in Asia-Pacific – the US$1.4bn private placement to start the refinancing process on the mega APLNG project and the US$458m Bayfront CLO for Clifford Capital, the first project finance securitisation in the Asia-Pacific market.
In Latin America, Citi led the latest add-ons for the Tocumen Airport in Panama, bringing total issuance to US$1.45bn, the US$950m Peru LNG bond refinancing deal, the US$600m deal for MSU gas-fired conversion projects in Argentina and the US$860m 144A deal backing Actis’ purchase of the InterGen assets in Mexico.
In the US, deals included the US$1.5bn bond issue for Spectra Energy Partners, NextEra, and Duke Energy on the Sabal Trail Transmission gas pipeline, a US$499m securitisation of residuals from solar tax equity for sPower, and muni-type projects deals – US$336m Natgasoline, US$1.8bn LAX People Mover and US$1.4bn for Delta Airlines Terminal LaGuardia. The Clover deal in Canada showed a dual-currency approach – C$678m and US$149m – to back the Canada Pension Plan Investment Board (CPPIB) purchase of a 49% interest in Enbridge’s Canadian renewable assets.
The Citi team is headed by Nasser Malik, head of global structured debt and global head of project and infrastructure finance in New York. The Americas team is headed by Stuart Murray, head of power and energy, and Larry Cyrlin, head of infrastructure, with Mayra Balcazar in Mexico and Daniel O’Czerny in Sao Paolo. The London team is headed by David Dubin, head of EMESA project and infrastructure finance, while Quyn Siew is based in Hong Kong.
Global Sponsor of the Year – Enel Green Power
Enel Green Power (EGP) is rapidly becoming the world’s top renewable energy company thanks to an ambitious strategy to build up large-scale renewables projects across all continents. This year, the company proved its increasing financial sophistication with several high-profile deals.
EGP, the renewables energy unit of Italy’s Enel, is adding wind and solar projects to its 42GW portfolio in 30 countries at breakneck speed, aiming to build about 12GW of new capacity by 2021 and investing more than €10bn.
“Enel Green Power is a market leader: we will build around 3GW of new capacity by the end of 2018 and in 2020 will achieve 4.4GW of growth per year, record numbers that no other competitor in the world can boast,” said EGP’s CEO Antonio Cammisecra in December, celebrating 10 years since the company’s foundation.
EGP is famous for relying on corporate financing thanks to the strength of the huge balance sheet of its parent Enel, Europe’s largest utility. This year, however, it took bold steps to diversify its financing techniques with several high-profile project financings for renewable plants across the globe.
One of the most remarkable deals was the €950m financing of 700MW of wind farms in South Africa with local banks, a very challenging project structured with a holdco financing overcoming difficulties and delays in the country’s renewable energy programme.
Later in the year, EGP repeated the feat with a US$605m project finance package backing 1.1GW of solar plants in Mexico with a consortium of international lenders from Europe, Asia and the Americas. EGP opened up the capital of the projects, selling a majority stake to investors Caisse de depot et placement du Quebec and CKD Infraestructura Mexico.
In its home market of Italy, EGP and co-investor F2i closed Europe’s largest-ever solar financing, raising €1.02bn of debt from seven banks to refinance its 400MW portfolio and fund future growth. EGP has been considering selling its stake to its JV partner to redeploy funds into new greenfield projects.
EGP has worked with development finance institutions in some of its more challenging markets. It raised debt from the IFC and the EIB to fund a 34MW Scaling Solar project in Zambia, and worked with Moroccan utility ONEE on a KfW and EIB-backed debt package for the first part of the 850MW Midelt wind scheme.
In Europe, EGP is looking at Spain for further growth together with Endesa, also part of the Enel group. The company has an 832MW portfolio of wind and solar plants including projects won in the country’s renewables auctions.
Auctions have been an area of focus worldwide, particularly in India, where Enel won 285MW of wind capacity in the country’s first renewables tender, and throughout Latin America, where EGP has been extremely active in Argentina, Brazil and Mexico, securing large portfolios that will fuel the company’s future growth.
In North America, the company contributed to the expansion of the growing power purchase agreement (PPA) market. It has signed corporate PPAs with clients as diverse as Adobe, Facebook, General Motors and Kohler to back massive wind farms in Kansas and Illinois.
EGP is led by CEO Antonio Cammisecra, working with CFO Marco Salemme. Project finance deals are structured by the company’s corporate finance team led by head of finance Michele Calderoni.
Global Financial Sponsors of the Year – Dalmore Capital
UK fund manager Dalmore Capital stands out this year for the completion of three significant acquisitions by its third fund that stood out for their volume and the fund’s use of syndicated debt and co-investment to complete the deals. Its active period of both fundraising and investing has continued its impressive growth trajectory over the last few years, as it sticks with its proven strategy of targeting assets with low-volatility and reliable, regulated returns.
Two of these deals, the 100% acquisitions of Cory’s Riverside energy-from-waste (EfW) plant and of John Laing Infrastructure Fund (JLIL), were valued at £1.5bn. The third – a bid for a 49% stake in an EDF wind portfolio as part of a consortium with Pension Infrastructure Platform (PIP) – stood at £700m.
The deals coincided with the August final close of the DCF3 fund at £950m which, following these landmark deals, is now 85% committed.
Dalmore gets a majority of its contributions from pension funds and other funds in the UK as well as a sizeable number of South-East Asian insurance groups, as well as from several EU funds and US pension funds.
On Riverside, DCF3, along with consortium members Fiera, Semperian and Swiss Life, together provided about £950m in equity for the acquisition while raising £550m in debt underwritten entirely by BNP Paribas.
The loan was quickly syndicated at the end of October into two tranches: the first a 20-year, £340m institutional tranche from Aviva, Sun Life, Scottish Widows and BNPP, was priced at 190bp. The second was a 12-year, £210m commercial tranche from Credit Agricole, HSBC, Santander and Siemens priced at 140bp.
The Riverside project currently stands at 72MW of generation capacity, with the potential for a doubling in size. The asset stood out for its strong operational track record and contracted revenues on both gate fees and energy generation.
On the EDF deal, Dalmore led the acquisition with PIP of a 49% stake in EDF’s portfolio of UK wind farms. The 24 projects, all but one of which are operational, combined for a total capacity of 550MW. The £700m bid sees Dalmore take a 36.75% stake in the total portfolio. Santander provided £350m in debt, priced at 145bp, to fund the acquisition.
Possibly the highlight for Dalmore this year was its first public-to-private deal, when it acquired a 100% interest in John Laing Infrastructure Fund (JLIF) in a consortium with Equitix. JLIF was valued at nearly £1.5bn and holds stakes in 67 PFI and PPP opportunities across the UK, Continental Europe and North America.
The deal included a 12-month debt financing of a £964m tranche and an additional €40.7m facility, each with two six-month extension options. It was priced at 125bp, increasing to 175bp following the first extension and to 225bp after the second.
Dalmore and Equitix intend to split the assets between them based on their expertise, with one non-core asset expected to be sold in the near future.
The group is headed by founders Michael Ryan, CEO, Alistair Ray, CIO, and John McDonagh, COO.
Global Law Firm of the Year – Allen & Overy
Allen & Overy came top in PFI’s 2018 legal league tables, putting some serious distance between itself and most of its global competitors, and consolidating its standing as the world’s foremost law firm for project finance.
The position at the very top of the rankings is nothing extraordinary for the firm. Allen & Overy has taken the first spot in the tables in eight of the past nine annual legal surveys, testament to the resilience and consistency of the firm’s work in a decade of shifting markets.
While it has consistently dominated the league tables across EMEA thanks to significant volumes of high-level work in Europe, the Middle East and Africa, 2018 marked the first time Allen & Overy clinched the first spot in Asia-Pacific over the past 10 years.
The firm took advantage of a growing project finance market in South-East Asia to expand its footprint in the region. It advised on landmark power projects such as the Nghi Son 2 IPP in Vietnam, the Jawa 1 gas-to-power project in Indonesia, and the Nam Theun 1 hydropower plant in Laos, and market-first oil & gas and petrochemical deals such as Vietnam’s Nghi Son refinery and the ongoing RAPID refinery and petrochemical integrated development in Malaysia.
The firm’s boost in Asia-Pacific was also helped by advisory mandates on big-ticket Australian deals such as the WestConnex, West Gate Tunnel and South Australia land titles privatisation projects in addition to a steady stream of mining and energy schemes.
Allen & Overy’s project finance practice is led by London-based global head Gareth Price. It counts on 70 partners around the worlds and includes 250 lawyers.
The firm says it was “as busy as ever” on greenfield development and financing – its historical strength – but expanded its activity in M&A deals and refinancing, a growing market particularly in developed economies. Overall it closed more than 60 deals worth US$35bn during the year.
Thanks to its solid banking practice, the firm is by far the leading lender-side adviser globally. Over the past year it closed 26 deals above US$500m as lenders counsel – seven deals more than its closest competitor, according to the PFI league tables. Among its banking clients are commercial banks, development finance institutions and export credit agencies.
The firm is also among the top sponsor advisers, however, counting construction and energy companies as well as specialist infrastructure funds, pension funds, insurers and sovereign wealth funds among its clients.
In Europe the firm closed 35 deals worth more than US$14bn across energy, transport, social infrastructure and telecoms. Some remarkable deals included the Hornsea offshore wind farm in the UK and the Borssele project in the Netherlands, various large-scale airport refinancings and M&A deals, and the Dutch Blankenburg tunnel.
The Middle East and Africa remained strong markets for the firm despite a volatile oil & gas market thanks to petrochemical projects led by the Dubai team, such as the Duqm Refinery in Oman and the BAPCO modernisation project in Bahrain, plus mega LNG financings such as the upcoming Rovuma LNG following last year’s US$8bn Coral South floating LNG in Mozambique.
The work in the UAE is one of the jewels in the firm’s crown, with advisory mandates on a majority of the country’s power projects, including increasingly large renewables deals.
Global Institutional Deal of the Year – Hornsea 1
The £3.5bn financing of the 1,200MW Hornsea 1 offshore wind farm represents the largest single deal in what is now a booming sector across the globe. Institutional investors played a major role in funding the scheme – opening the door for what are expected to be many more deals across the world in this sector.
The project involves Danish energy company Orsted, a leading player in the offshore wind market, and investor Global Infrastructure Partners (GIB), a leading global infra fund and no stranger to the offshore wind market.
The financing follows on from the template set by Orsted on its Walney deal last year. But the Hornsea 1 scheme upscaled the financing requirement. That notwithstanding, the deal was significantly oversubscribed and the institutions were all scaled back.
Under the deal, GIP is buying 50% of the development from Orsted and funding its share of the construction cost. The debt package runs for 16.5 years and pricing is said to be around 190bp.
Institutional investors provided £1.95bn of the £2.95bn of long-term debt on the deal. Funders on the £1.3bn institutional tranche are Aviva with £200m, and Legal & General with £300m, plus Blackrock, M&G, Sun Life, Pension Insurance Corporation, Westbourne Capital, Macquarie, Scottish Widows, TD Asset Management, Barings and Vantage Infrastructure.
The debt was split between fixed rate and CPI tranches. In addition, there is a £400m EKF guaranteed institutional fixed-rate loan note arranged by Citigroup, half taken by Aviva, and a £250m mezzanine tranche from PKA.
The banks on the £700m commercial bank tranche are Mizuho, MUFG, Credit Agricole, RBS, Banca IMI, BNP Paribas, Norinchukin, ABN AMRO, ING, KfW IPEX, SMBC, Siemens, Lloyds and Santander. In addition there is a short-term £500m offshore transmission owner (OFTO) loan and a £400m EKF guaranteed loan.
The deal is rated BBB. It is backed by an EPC construction guarantee and O&M contract from Orsted, and a contract for difference (CfD) on the power sales.
Orsted, starting with Walney, has been looking to open up the debt capital markets (DCM) for its huge offshore wind financing programme. The company is looking to raise more funds from the DCM on a corporate basis in Europe but it looking at more structured solutions in markets such as Taiwan.
Mini perms could come into play with construction bank debt and long-term DCM take-outs. A lot will depend on whether Orsted continues with its farm-out programme, selling 50% stakes in development assets to fund itself going forward.
Whatever route Orsted takes, it has certainly opened up the DCM and if it keeps performing, there is no reason why it cannot keep pushing on with its mega deals.
Slaughter & May advised Orsted on Hornsea 1. Clifford Chance advised GIP and Allen & Overy advised the lenders. Orsted structured and led the financing. Citigroup and MUFG advised on the deal. Riskbridge Associates acted as hedging adviser.
Global Multilateral Deal of the Year – Nachtigal
Nearly every significant development financial institution (DFI) came together to bring a hydro project five years in the making to financial close.
A consortium of France’s EDF, the IFC and the Republic of Cameroon signed the financing documents in November for the 420MW Nachtigal hydropower plant five years to the day after EDF agreed to develop it.
Africa50 and STOA, an investment fund owned by Caisse des Depots and the French Development Agency (AFD), later joined the project with 15% and 10% equity stakes, respectively.
The completion of the project – one of the few hydropower PPPs in sub-Saharan Africa - will help to provide power to the nearly 50% of Cameroon’s population still living without electricity, as well as reduce the frequency of blackouts, and lower power prices. The dam is projected to save the country an additional US$100m in generation costs annually.
The €1.26bn project on the Sanaga River is considered a pathfinder for the financing of a number of upcoming hydro projects in the country.
A €916m debt portion was split into two tranches, with a commercial tranche in the Central African franc equivalent of €171m raised by Societe Generale, Standard Chartered, Morocco’s Attijariwafa and Cameroon’s BICEC. The tranche had a seven-year tenor with the possibility of two separate seven-year extensions.
The euro-denominated DFI tranche stood at €745m and was provided by African Development Bank (€118m), Africa Finance Corporation, French Development Agency (AFD) (€90m), CDC Group (€90m), DEG (€35m), Emerging Africa Infrastructure Fund (EAIF) (€50m), European Investment Bank (EIB) (€50m), FMO (€30m), the IFC (€110m), OFID and Proparco (€60m) on an 18-year tenor.
The World Bank’s IBRD provided a partial risk guarantee (PRG) on the commercial tranche and a stand-by letter of credit for the sponsors. MIGA provided an equity guarantee and the Cameroon government authorised a US$1.27bn guarantee on the project in October.
Construction is expected to begin before the end of the year or early in 2019, performed by Belgium’s Besix group, France’s NGE and Morocco’s SGTM, with commissioning expected in 2023.
The project will consist of a 2km long, 14m high dam, a 3km supply canal and seven 60MW turbines. Once operational, it will sell its power to Cameroon’s grid operator ENEO through a power purchase agreement (PPA) linked to the 35-year concession length. Payments will be made in Central African francs, with 80% indexed to euros.
On top of the guarantees, the risk mitigators were – according to those involved – the strength of the sponsor group, the open and direct lender negotiations between all parties, and the restructuring of ENEO’s debts.
The tenor on the offtaker’s debts was increased from 2021 to 2031, reducing inefficiencies and bringing it up to-date in accordance with the repayment plan. This provided an extra level of certainty for lenders that the project was well-structured.
EDF was able to arrange a classic project finance structure, complete with the standard termination and force majeure provisions as well as compensation payments.
Societe Generale was financial adviser, while Clifford Chance advised the lenders, Allen & Overy advised the IBRD, Herbert Smith Freehills advised the sponsors and Eversheds advised the government. Mott MacDonald was technical adviser.