Renewable Energy Projects Attract Private Capital Funds

A new and seamless interface between renewable energy (RE) projects and private capital fund managers has been now open. Early investment settings by fund managers registering with the UK-based Project Finance Exchange (PFX) have been showing a clear preference for RE.

May 05, 2021. By Manu Tayal

A new and seamless interface between renewable energy (RE) projects and private capital fund managers has been now open. Early investment settings by fund managers registering with the UK-based Project Finance Exchange (PFX) have been showing a clear preference for RE. 

Hedge, alternative investment, private debt and equity, along with other private capital funds, so far have a combined $52 billion available to invest in projects across 40 market sectors. 

However, RE has already been clearly showing as the most popular across all global regions. Preferred deal values range between $10 million and over $5 billion. 

PFX, which opened in March this year, now enabled RE projects to be presented direct to a large and growing pool of capital, and to seamlessly connect and engage directly with private capital fund managers. 

Further, the long-established market conventions including confidentiality and non-disclosures are all built into PFX fintech.

Speaking on the matter, David Rose, Chairman of PFX, said “PFX focuses exclusively on project finance, which has evolved out of the major infrastructure and construction projects, with significant deal values, funded by tier-1 banks and institutions. After two decades of evolution, it is now defined simply as lending predicated on the track record and financial stability of whoever is buying the output from the built project.”

Rose further added “in the case of renewables this means that lending is underwritten against the electricity grid or other entity contracted to buy the power generated through their power purchase agreements (PPA’s) with the plant. In most countries the regional or national grid can usually be relied upon to pay its bills, so it’s no surprise that RE makes a lot of sense for private capital funds seeking risk-mitigation and long-term returns.”

“Provided the crucial signed PPA is available or under development with a credible off-taker, companies and municipalities worldwide can apply for project finance to build RE plants, leaving themselves free and clear of any financial liability. Naturally all other supporting documentation including EPC contracts, permits, permissions and other agreements need to be available, but the only assets taken into account from the financing standpoint are those to be built through the project’s special purpose vehicle (SPV). Mainstream banks cannot lend on these terms as their own regulations prevent them from lending on income from a project that is yet to be built.  Financing of RE projects is now vastly simplified through the project finance structure, along with PFX acting as the structured interface between projects and private capital fund managers,” Rose concluded.  

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