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Background The sponsor wanted to combine all of its hydro assets under one SPV, as well as acquire 2 additional hydro assets with a total installed capacity of 144MW. This would enable the borrower to significantly expand its portfolio and footprint in the hydropower sector. The overall deal involves 10 mid-to-large sized HEPPs in various parts of Turkey. The multi-tranche loan assisted in the acquisition of the two additional projects from the privatisation authority (PA). The entire portfolio has an installed capacity of 400MW, and is one of the largest deals in Turkey for the year. Transaction BreakdownThe deal was originated as quickly as possible in order for the sponsor to be able to acquire the assets within the due date set by the PA. Additionally, the existing assets were combined under one SPV, and their existing project finance facilities were refinanced in order for the sponsor to ease its operational activities and provide it with enough time to get ready for an IPO in the mid-term. The deal was structured under standard project financing terms, where the financing is based on a limited recourse structure. The transaction’s size and the tenor are in the market range within the Turkish project finance space. |
The deal was extremely important for the sponsor because the combination of assets had allowed the SPV and the sponsor to diversify its production facilities into various parts of Turkey, which helped mitigate the fluctuation risk in production. In addition, the projects received a further benefit from the combined cash flow that would ease the debt service substantially.
The existing hydropower assets were financed by three existing lenders (Garanti Bank, VakifBank and Yapi Kredi Bank).
The bookbuilding strategy was centred on the Group’s relationship banks, where the timing of financial close was vital. The strong relationship between the banks and the borrower allowed it to execute the deal rapidly.
However, the overall size of the deal and the acquisition of the new hydropower plants required the addition of three new lenders (İş Bank, Ziraat Bank and AK Bank), which the sponsor was able to successfully attract while staying competitive on pricing.
