DLA Piper in New Zealand advises NZGIF on financing aspects of an international capital raise to support solar energy

A DLA Piper team in New Zealand led by Rachel Brown, advised New Zealand Green Investment Finance (NZGIF) on the financing aspects of a AUD170 million capital raise, attracting international investors First Sentier Investors and Natixis Investment Managers, to launch its newly created NZGIF Solar Finance programme. The structure is unique and includes securitisation and project finance concepts. It is certified by the Climate Bonds Initiative with NZGIF being the first New Zealand financial institution to achieve the certification.

The solar loan will initially finance Aotearoa New Zealand’s largest residential PPA (Power Purchase Agreement) portfolio, managed by solarZero.

NZGIF developed the solar loan programme and completed the capital raise, attracting AUD90 million of private capital from First Sentier Investors and Natixis Investment Managers alongside its own investment of AUD80 million.

NZGIF Solar Finance is NZGIF's first private debt placement with international co-investors, and provides the long-term, fixed rate debt that is required to accelerate distributed solar in Aotearoa New Zealand.

The NZGIF Solar Finance programme is the first issuance by a New Zealand-based financial institution to secure Climate Bonds Initiative certification. This certification for climate-aligned debt instruments is awarded by the Climate Bonds Initiative following a science-based assessment of the programme’s sustainability attributes. The certification is used globally by bond issuers, governments, and investors to prioritise investments which genuinely contribute to addressing climate change.

Solar energy is rapidly transforming New Zealand’s energy landscape, both through new grid-connected solar farms and through distributed solar installations on homes, schools, farms, and businesses.

 

How the programme works

Essentially, NZGIF Solar Finance is a repeatable financing solution for solar energy.

Access to debt finance that meets solar energy operators’ needs is a major barrier to developing solar generation projects in New Zealand. NZGIF Solar Finance will work with developers across Aotearoa New Zealand to finance and grow their portfolio. Once the portfolio matures, NZGIF Solar Finance will filter and organise loans by eligibility criteria, wrap the loan in a credit enhanced financing structure, secure Climate Bonds Initiative certification and then place the portfolio with institutional investors to provide attractively priced long-term debt to fund the portfolio.

This diagram shows how the programme works: NZGIF Solar Finance Diagram

 

Co-investment partners keen to accelerate the future of solar in New Zealand

First Sentier Investors and Natixis Investment Managers are investing AUD90 million into the growth of renewable energy in the New Zealand marketplace. Societe Generale acted as arranger and green loan coordinator for structuring the NZGIF Solar Finance issuance and NZGIF corporate green financing framework.

“We are delighted to partner with NZGIF and solarZero to support homeowners in accessing solar power. The structure of this transaction was innovative, and we liked that this initiative took a whole-of-country approach to reducing emissions associated with electricity usage. As an investor with a strong focus on sustainable finance and its potential positive long-term impacts, we look forward to contributing to New Zealand’s efforts to reduce carbon emissions in the future,” said Craig Morabito, Senior Portfolio Manager of Global Credit at First Sentier Investors.

Natixis Investment Managers were acting on behalf of managed funds, and a Hong Kong based insurance company. “Our focus remains on arranging and investing in attractive infrastructure debt assets with strong underlying trends. Distributed renewables and storage are compelling markets, particularly in New Zealand” says Angus Davidson, Asia Pacific Head of Private Debt Real Assets at Natixis Investment Managers.

“Societe Generale is delighted to have assisted NZGIF in establishing NZGIF Solar Finance and bringing top tier credit investors to the programme facilitating development of residential solar energy in New Zealand.

“Contributing to this landmark project showcases Societe Generale’s longstanding commitment to supporting energy transition. We believe that NZGIF's programme is an excellent platform for connecting global capital with distributed solar generation to accelerate the shift to renewable energy in New Zealand,” said Arkady Lippa, Co-head of Asset Backed Products for Asia Pacific at Societe Generale.

“Working with Natixis Investment Managers, First Sentier Investors, and Societe Generale as an arranger, to bring new investors of this quality into the New Zealand market is a big milestone for NZGIF” says Jason Patrick, NZGIF Chief Investment Officer.

 

solarZero is a cornerstone solar partner

“solarZero will be the first cornerstone partner of NZGIF Solar Finance. We expect other New Zealand-based solar providers to be able to access the NZGIF Solar Finance programme soon” says Jason Patrick.

“Replacing short term floating rate debt with longer term fixed rate options will allow New Zealand solar providers to accelerate solar energy access to New Zealanders, ” he adds.

The new programme will support solarZero’s rapid growth (having grown at a rate of almost 50 per cent p.a over the last two years) and further development of its ‘virtual power plant’ (VPP) technology which it sees as a critical ingredient in New Zealand’s transition to 100% renewable energy by 2030.

“From when we began working with NZGIF on this ambitious idea, to seeing it come to fruition today, we’re extremely proud of this partnership and what it can achieve. The financing provided by NZGIF, Natixis Investment Managers and First Sentier Investors, is long term, matching the term of our underlying customer contracts, and is a rarity in the New Zealand market,” says Matt Ward, CEO at solarZero.

“It’s especially meaningful as it provides greater financing certainty and improved operational cash flow which will allow us to accelerate the roll-out of residential solar and battery solutions across the country,” he adds.

BlackRock, via its Climate Infrastructure franchise, is the majority owner of solarZero. Charlie Reid, APAC co-Head of Climate Infrastructure, BlackRock, said „We are delighted to see the launch of the NZGIF Solar Finance program, with solarZero as the first beneficiary of the scheme. This co-investment is a step forward in supporting New Zealand solar providers, like solarZero, to give New Zealanders greater access to residential solar and battery solutions, while also helping New Zealand reach its stated goal of reaching net zero carbon emissions by 2050. This is a great example of collaboration to mobilise capital at scale to support an orderly energy transition.”

 

Climate Bonds Standard certification signals confidence

“We have an enormous challenge with the climate emergency. The very first thing we need to do is rapidly shift to clean energy; then change industry, land use, and so on,” says Sean Kidney, CEO, Climate Bonds Initiative.

“The Climate Bonds Standards and Certification Scheme outlines what we need to do; it’s used around the world to provide confidence that investments are consistent with what we must do to address that climate emergency.”

NZGIF Solar Finance’s certification confirms that the use of proceeds of the bond are in line with the global standard.

“We need a lot more of these investments, and fast. NZGIF Solar Finance shows us what we need to do,” says Kidney.