Financing Central American Renewables and Catalyzing Investment - - PowerPoint PPT Presentation

CAMRIS 2015 Central American Renewables Investment Summit July 2015

Financing Central American Renewables and Catalyzing Investment

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CAMRIS July 2015

Attracting Financing to Central American Renewable Energy Projects

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Pan American Finance has conducted research on sources of debt and equity capital for renewable energy projects in Central America for the five and a half-year period from January 2010 to June 2015

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58 transactions, 1.8 GW of new capacity, estimated total investment of ~US$4.9 billion1 – of which ~US$3.4 billion (~69%) in debt and ~US$1.5 billion (~31%) in equity

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Researched renewable energy projects that have secured debt and equity financing

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Seven countries:

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Belize

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Guatemala

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Honduras

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El Salvador

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Nicaragua

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Costa Rica

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Panama

Honduras Guatemala El Salvador Belize Costa Rica Panama Nicaragua

1 Excludes large hydro projects ICE Reventazon and CHN Tumarin, with combined capacity of 560 MW and total investment ~US$2.5 billion.

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CAMRIS July 2015

Attracting Financing to Central American Renewable Energy Projects

24% 17% 26% 2% 12% 17% 2% Honduras Nicaragua Panama El Salvador Costa Rica Guatemala Belize

Total: 58 deals

611 MW 34% 240 MW 13% 497 MW 28% 14 MW 1% 290 MW 16% 147 MW 8% 0 MW Honduras Nicaragua Panama El Salvador Costa Rica Guatemala Belize < 1%

Total: 1.8 GW

Renewable energy financings by country (2010-15)1 New renewable energy capacity by country (2010-15)1

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Panama and Honduras had the largest number of announced financings, together accounting for approximately 50% of the total

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Belize and El Salvador had the fewest, representing only approximately 4% of all announced financings

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Panama and Honduras accounted for approximately 62% of new capacity financed

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The largest project financed in Central America was InterEnergy Holdings’ 215 MW Penonomé Wind Project

Source: Bloomberg New Energy Finance; Pan American Finance data.

1 Excludes large hydro projects ICE Reventazon and CHN Tumarin, with combined capacity of 560 MW and total investment ~US$2.5 billion.

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CAMRIS July 2015

CAGR: 52%

Attracting Financing to Central American Renewable Energy Projects

Source: Bloomberg New Energy Finance; Pan American Finance data.

1 Excludes large hydro projects ICE Reventazon and CHN Tumarin, with combined capacity of 560 MW and total investment ~US$2.5 billion. 2 One project in Belize in 2014 of less than 0.5MW.

113 50 22 24 281 121 62 52 90 33 3 88 39 68 65 227 10 14 85 100 105 10 2 24 111 273 MW 226 MW 182 MW 260 MW 727 MW 131 MW 2010 2011 2012 2013 2014 H1 2015 Honduras Nicaragua Panama El Salvador Costa Rica Guatemala

New renewable energy capacity by country (2010-15)1,2

Total: 1.8 GW

Cumulative new renewable energy capacity by country (2010-15)1,2

1,668 MW 1,799 MW 113 163 185 209 490 611 62 114 204 237 240 240 88 128 195 260 487 497 14 14 14 85 85 185 290 290 10 10 12 36 147 147 273 MW 500 MW 681 MW 941 MW 2010 2011 2012 2013 2014 H1 2015 Honduras Nicaragua Panama El Salvador Costa Rica Guatemala

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CAMRIS July 2015

Attracting Financing to Central American Renewable Energy Projects

48% 26% 22% 4% Small Hydro Geothermal Solar Wind 499 MW 28% 452 MW 25% 755 MW 42% 94 MW 5% Small Hydro Geothermal Solar Wind

Renewable energy financings by technology (2010-15)1 New renewable energy capacity by technology (2010-15)

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Small hydro power plants represented 48% of all renewable energy projects financed and 28% of new renewable capacity, with an average project size of 18 MW

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Wind and solar PV power plants represented 48% of renewable energy projects financed and 67% of new renewable capacity, with an average project size of 43 MW

Total: 58 deals Total: 1.8 GW

Source: Bloomberg New Energy Finance; Pan American Finance data.

1 Excludes large hydro projects ICE Reventazon and CHN Tumarin, with combined capacity of 560 MW and total investment ~US$2.5 billion.

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CAMRIS July 2015

CAGR: 52%

Attracting Financing to Central American Renewable Energy Projects

Source: Bloomberg New Energy Finance; Pan American Finance data.

1 Excludes large hydro projects ICE Reventazon and CHN Tumarin, with combined capacity of 560 MW and total investment ~US$2.5 billion.

New renewable energy capacity by technology (2010-15)1

125 52 84 129 365 4 14 302 131 109 174 94 117 5 39 55 273 MW 226 MW 182 MW 260 MW 727 MW 131 MW 2010 2011 2012 2013 2014 H1 2015 Wind Solar Small hydro Geothermal

Total: 1.8 GW

Cumulative new renewable energy capacity by technology (2010-15)1

125 177 261 390 755 755 4 18 321 452 109 283 377 494 499 499 39 39 39 39 94 94 273 MW 500 MW 681 MW 941 MW 2010 2011 2012 2013 2014 H1 2015 1,668 MW 1,799 MW Small Hydro Geothermal Solar Wind

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CAMRIS July 2015

Attracting Financing to Central American Renewable Energy Projects

Total: 38 deals, 97 participants1 Total: 48 deals, 48 primary sponsors1

Leverage (2010-15)1,2

7% 11% 30% 52% 50%-60% ≥70%

Debt sources by participant type (2010-15)1,2

69% 31% DFIs Commercial banks

Equity sources by primary sponsor type (2010-15)1,2

35% 4% 19% 10% 17% 15% Global investor Government or government affiliated Central American investor Local investor Latin American investor Emerging markets investor

Total: 27 deals1

≤50% 60%-70% 

In financings analyzed, 69% of participations were by Development Finance Institutions and 31% by commercial banks

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Approximately 50% of primary equity sponsors were private investors with multi-country experience

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Governments sponsored 15% of new renewable- energy projects, and local investors sponsored 35%

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Approximately 52% of projects analyzed had leverage 70% or greater, 41% had leverage of between 50% and 70%, and 7% had leverage of 50% or less

Source: Bloomberg New Energy Finance; Pan American Finance data.

1 Statistics based on transactions for which information was publicly available; 2 Excludes

large hydro projects ICE Reventazon and CHN Tumarin, with combined capacity of 560 MW and total investment ~US$2.5 billion.

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CAMRIS July 2015

Attracting Financing to Central American Renewable Energy Projects

Lessons Learned

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Project completion risk is real

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Expect the unexpected – if it can go wrong, it probably will

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Projects cost more and take longer than planned to be completed

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Lenders will require that adequate contingencies be built into project costs

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Expect a debate about the resource – lenders’ engineer versus owner’s engineer

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Same resource, different opinions

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Lenders’ engineer will always be more conservative

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Credibility of owner’s engineer with lenders is critical to facilitating a smoother financing process

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Experienced and financially strong sponsors do matter

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Financial strength can mitigate completion and operating risks associated with a project

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Availability of new capital is important when problems arise

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Loan tenor is highly important to returns

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Don’t focus only on interest rate and spread

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Increased loan tenor has a significant positive impact on equity returns

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CAMRIS July 2015

Pan American Finance

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Pan American Finance provides M&A and capital raising financial advisory services in Latin America, with particular focus on countries around the Caribbean Basin

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US$85 million Phase I refinancing and US$160 million Phase II long-term project financing for Polaris Energy Nicaragua’s 72 MW San Jacinto Geothermal Power Project in 2010

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Acquisition of certain assets of Conergy, German EPC contractor and solar PV developer, by Kawa Capital Management in 2013

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Joint venture between Sonnedix Solar and JP Morgan Asset Management’s Infrastructure Investments Fund; over €300 million in new equity commitments by the JV partners in 2014

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Acquisition, US$100 million bridge financing and US$300 million long-term project debt financing for InterEnergy Holding’s 215 MW Penonomé Wind Project in 2014

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In the last five years, our firm has advised on over US$1.0 billion in renewable energy M&A and capital raising transactions

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Our firm has gained extensive experience in the power and renewable energy sector in Central America and has worked with numerous debt providers and equity investors

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Development finance institutions

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Local, regional, and global commercial banks

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Strategic and financial equity investors

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CAMRIS July 2015

Pan American Finance

 Transactions:

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M&A

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Restructuring

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Senior Debt

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Subordinated Debt

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Equity

 Technologies:

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Solar

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Wind

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Geothermal

 Geographies:

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Latin America

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Europe

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Asia

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South Africa

December 2014 US$ 16,000,000 Subordinated Long-term Debt Project Financing

Panama

December 2014 US$ 284,000,000 Senior Long-term Debt Project Financing

Panama

December 2014 US$ 375,000,000 Equity Private Placement

Bermuda

April 2014 US$ 100,000,000 Bridge Financing

Panama

April 2014 Acquisition of 215 MW Wind Project in Panama

Panama

November 2010

Polaris Energy Nicaragua, S.A.

US$ 140,000,000 Senior Long-term Project Financing

Nicaragua

US$ 30,000,000 Refinancing of existing senior financing November 2010

Polaris Energy Nicaragua, S.A.

US$ 20,000,000 Subordinated Long-term Project Financing

Nicaragua

September 2013 Acquisition of Assets

USA/Germany

November 2010

Polaris Energy Nicaragua, S.A.

US$ 30,000,000 Refinancing of Existing Senior Financing

Nicaragua

Infrastructure Investments Fund

Pan American Finance has completed over US$1.0 billion in transaction value for renewable energy projects in Central America and worldwide, including for geothermal, solar and wind

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CAMRIS July 2015

Pan American Finance

Edmund R. Miller Senior Managing Director, Partner Direct: +1 (305) 722 – 7244 Mobile: +1 (305) 987 – 0995

emiller@panamfinance.com

Pan American Finance, LLC and PAF Securities, LLC

601 Brickell Key Drive, Suite 604, Miami, Florida 33131 Tel: +1 (305) 577 – 9799 • Fax: +1 (305) 577 – 9766 Website: www.panamfinance.com PAF Securities is an affiliate of Pan American Finance and a member of FINRA and SIPC

Mauricio Borgonovo Managing Director Direct: +1 (305) 722 – 7246 Mobile: +1 (305) 401 – 7009 mborgonovo@panamfinance.com Jabier Arbeloa Managing Director Direct: +1 (305) 722 – 7248 Mobile: +1 (954) 740 – 3719 jarbeloa@panamfinance.com Ben Moody President & CEO, Partner Direct: +1 (305) 722 – 7245 Mobile: +1 (786) 556 – 2273 ben@panamfinance.com