Recapitalization Financing for Renewable Energy and Infrastructure Assets

Renewable energy and infrastructure assets frequently reach commercial operation with financing that was designed primarily to get the project built.

Construction debt can be expensive. Sponsor equity can remain trapped in the asset. A short mini-perm can create refinancing pressure. Several individual project loans can become inefficient after a sponsor has assembled a diversified operating portfolio.

Financely arranges recapitalization financing for operating and substantially de-risked renewable energy and infrastructure assets where the sponsor wants to refinance existing debt, reduce cost of capital, extend tenor, release capital or introduce a new institutional investor.

Refinance Construction Debt After COD

Construction lenders are paid to assume completion risk. Once the project is built, tested and generating contracted revenue, that risk has materially changed.

An operating solar, wind, storage, transmission or other infrastructure asset can therefore attract lenders that would not have financed it before completion.

Refinancing can reduce the interest margin, extend amortization and replace short construction debt with long-term institutional capital.

Release Equity From Stabilized Assets

Sponsors often need to recycle capital into the next development pipeline.

If an operating asset supports more debt than remains outstanding, a refinancing can potentially return capital to the sponsor after existing lenders are repaid and required reserves are funded.

The transaction must remain financeable after the distribution. Lenders will not size a dividend recapitalization solely around an appraisal if project cash flow cannot support the resulting debt service.

Portfolio Recapitalization

A sponsor that owns ten operating projects can have ten separate facilities, reserve structures, covenant packages and maturity dates.

A portfolio recapitalization can consolidate eligible assets under a larger financing platform and provide diversification across sites, offtakers and operating profiles.

Financely also works with sponsors evaluating structured finance for renewable energy assets.

Mezzanine and Preferred Equity

Senior refinancing is not the only recapitalization option.

Preferred equity or mezzanine debt can provide incremental proceeds beneath existing or newly arranged senior debt. This can be useful where the sponsor wants additional capital but does not want to sell a controlling interest in the underlying assets.

Our renewable portfolio mezzanine financing work covers this part of the capital stack.

Recapitalizing Assets With Merchant Exposure

Contracted assets generally support more leverage than projects dependent primarily on merchant prices.

A hybrid revenue model can still be financeable. Senior debt can be sized primarily against contracted cash flow while merchant upside remains available to support junior capital and equity returns.

Credit Enhancement Can Widen the Lender Universe

Some recapitalizations are constrained by sovereign, offtaker, convertibility or political risk rather than asset performance.

A guarantee, political-risk policy or other risk-sharing structure can improve the senior financing profile where the instrument addresses a specific risk that prevents institutional lenders from participating.

Financely covers these structures through its renewable energy credit enhancement and risk sharing service.

What We Can Recapitalize

• solar portfolios;
• wind farms;
• battery storage assets;
• transmission and utility infrastructure;
• telecommunications infrastructure;
• transport and logistics infrastructure;
• water and environmental infrastructure;
• contracted industrial infrastructure; and
• multi-asset infrastructure portfolios.

What Financely Needs

• asset list and ownership structure;
• existing debt schedule;
• historical operating performance;
• revenue agreements;
• financial model;
• remaining contract tenor;
• current valuation where available;
• requested recapitalization proceeds; and
• intended use of released capital.

Paid Recapitalization Advisory

Financely provides paid advisory and capital placement. We structure the recapitalization, prepare the institutional financing case and approach capital providers whose mandate matches the asset and transaction.

We do not market unprepared projects indiscriminately. The mandate is packaged for underwriting before lender distribution begins.