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The recently launched Marguerite Fund has got off to a strong start, most notably by closing two greenfield solar deals in a short period of time. Both are located in France and both were divested by EDF Energies Nouvelles.
Marguerite closed the first deal in December last year but it was announced this week that the syndication on the senior debt closed successfully in April. Central Photovoltaïque de Toul-Rosières 2, as it is known, concerns the purchase of 36MW of a larger 115MW facility near Nancy from EDF EN. EDF is divesting parts of its site due to a regulation in France that developers can only have 12MW sites within 500 metres of each other. This is reflective of solar regulation being geared more towards smaller projects across Europe.
EDF EN remains in charge of the deals EPC and O&M, meaning that the project retains the experience of a strong sponsor. Equipment suppliers are also highly regarded, with First Solar providing the panels and SMA providing the inverters. The deal benefits from a long-term feed-in tariff, as long as the deal meets the relevant connection deadline. France’s FiT differs from region to region, with those with lower levels of sunlight compensated at a higher rate than those with more sun.
The Toul-Rosieres 2 deal closed in just two months, through €108m in debt via underwriters Credit Agricole and BNP Paribas. This is split between a term loan and VAT facility. The speed of close is an impressive feat given the funding crisis across Europe at the end of last year. Impressively as well, Credit Agricole and BNP persuaded Marguerite to adopt a hard mini-perm structure with a 12-year tenor. Pricing was cut as a sweetener for accepting the refinancing risk, and is said to range between 250bp and 300bp.
Syndication has been similarly successful. General syndication was launched after financial close and closed on April 16. Many traditional project finance lenders are said to have balked at the deal’s structure, with its lower margins and short tenor not usually associated with European PV. A more eclectic group of banks comfortable with the deal were found, and three lenders (ASN, Helaba, and Triodos Bank) entered the deal in the end. Triodos is not a name usually associated with project finance, the bank is a niche Benelux lender, but it has a strong ethical and environmental focus so the project’s use of military land for green purposes chimed well with its overall ethos.
Marguerite’s second deal, the Massangis plant, closed this May in an even shorter time-frame – six or seven weeks depending on who you ask. This is mainly as it re-uses the template set forth by the first transaction. The deal is practically identical, with the same sponsor and equipment suppliers. It is once again a 36MW section of a larger plant, although this time the overall plant is just 56MW. The deal is located in Burgundy, however, so it will have a slightly different FiT.
This time around, Crédit Agricole is the only underwriter. The deal is slightly larger, at around €130m including both term loan and a VAT facility. The tenor is believed to be slightly shorter as well, at just over 10 years. This is a legal tenor, however, as structural elements at the back end of the deal should reduce the deal’s maturity. Margins are said to be similar to the first deal. Syndication has kicked off already. Closing the two deals in quick succession has been a boon to Marguerite as, despite its strong background sponsorship, it was still technically an untested new entrant to the crowded infrastructure equity market. The two deals are joined by their purchase of a stake in the already closed C-Power offshore deal in the renewables space.
Although a new player, the fund is staffed by a group of old hands at project finance. Many are ex-Santander Infrastructure Capital partners, including CEO Nicolas Merigo. Bill Pierson, MD Energy, was also at Santander but is more famous for being global head of project finance at Royal Dutch Shell. CFO David Harrison was at Macquarie for 11 years, were he was head of Macquarie’s Infrastructure Group Europe and CEO of the Macquarie Infrastructure Development Fund. The MD of transport Michael Dedieu joined from Fluor, where he was head of infrastructure sales and business development.
The Marguerite Fund’s core sponsors, who collectively provided €600m in funds, are Caisse des Dépôts et consignations, Cassa Depositi e Prestiti, the European Investment Bank, Instituto de Crédito Oficial, KfW, and PKO Bank Polski. In addition to the €600m from these core sponsors, the European Commission, Bank of Valletta (Malta), and Caixa Geral de Depósitos (Portugal) have committed €110m, bringing the total of financial commitment to €710m (up from €600m). The fund acts broadly in line with the policy directives of its core sponsors, and aims to support the expansion of the Trans-European Networks in Transport and Energy, as well as supporting the EU’s 20-20-20 climate change and energy targets.
As such, the fund mainly targets greenfield investments, a less competitive space in European equity at present. “The fund looks at some projects which are pre-construction and some which are under construction. The fund is not looking to take early-stage development risk,” said Bill Pierson, MD Energy at Marguerite. “Permitting et cetera has to be tied up before we consider investing in a project although we may get involved at an earlier stage.”
The fund does have a 35% brownfield requirement, but with certain conditions. “We will do brownfield, but it cannot just be buying into an operational asset,” said Pierson. “There has to be a capex element for us to consider it or a portfolio of existing assets with a pipeline of projects to be built. We have to be supporting further expansion or investment.”
When it comes to energy, Marguerite is eyeing many opportunities across Europe. “On the energy front, we’re looking at some TEN-E projects and various waste-to-energy in the UK and Poland and we are currently bidding on the Poznan waste-to-energy project in Poland. Following on from the C-Power deal, we are looking at more opportunities with offshore wind, particularly in Germany. Onshore wind is also a target in Poland where we are in advanced discussions on a 100MW project and Romania, particularly after their regulatory framework was approved this year.”