Introduction

A global energy provider sought to expand its portfolio by acquiring a renewable biogas portfolio in Europe. Despite the company's extensive experience in upstream and downstream oil and gas production and operations, they had limited knowledge of renewable waste-to-energy biogas projects and operations. Recognising the need for specialised expertise, they engaged our renewables expert, Phil Gerrard, to provide comprehensive advisory services throughout the acquisition process.

Challenge

The primary challenge for the company was navigating the complexities of the renewable biogas sector, which required a deep understanding of technical, operational, and commercial aspects specific to this industry. The buyer needed to thoroughly assess the risks and opportunities associated with each site and special purpose vehicle (SPV) within the portfolio to make an informed investment decision.

Solution

Phil worked as part of a small, highly skilled advisory team to conduct a comprehensive due diligence process, focusing on both technical and commercial aspects. The team performed Technical Due Diligence on all sites and countries, as well as Commercial Due Diligence on critical areas such as feedstock supply, digestate disposal, and energy offtake. The due diligence process was completed within an 8-week timeframe.

To provide the client with actionable insights, initial "red flag" reports were produced that highlighted key areas of risk and opportunity for each site and SPV. These reports were supplemented by detailed individual reports and a comprehensive report outlining commercial risks and opportunities related to feedstock, digestate, offtake, production, and technical areas.

Results

Thorough due diligence and expert analysis enabled the team to identify significant opportunities for the energy provider to optimise their investment. The insights provided enabled the client to negotiate a reduction in the transaction price, resulting in savings of over £100 million on the original price.

Introduction

A leading insolvency practitioner (IP) needed support to assist with the turnaround of a renewable energy business that had entered administration. 

The distressed assets included a 40MW battery storage project and 20MW gas peaking projects across two sites. Despite a £30m+ investment by an infrastructure fund, the projects were not successfully commissioned and generated no revenue. The best independent asset valuation stood at £14m, significantly lower than the invested amount.

Challenge

The IP faced the challenge of reviving the distressed renewable energy assets and maximising their value for the benefit of the investors and creditors. 

The projects faced technical issues, preventing them from being commissioned and generating revenue. Additionally, the existing offtake agreements needed to be renegotiated to ensure optimal returns once the assets were operational.

Solution

Finativ's expert, Phil Gerrard, worked closely with the IP to devise and execute a comprehensive turnaround plan. They installed dynamic response software at the battery site and completed the commissioning and handover process with contractors on both sites. The team also successfully renegotiated the offtake agreements to secure favourable terms.


Over a 6-month period, the assets were closely monitored and ramped up their capacity to reach full operational potential. To maximise the value of the assets, our specialist conducted a global marketing process on behalf of the IP, targeting potential funders and investors.


Results

Through the combined efforts of the IP and Phil, the distressed renewable energy assets were successfully revitalised. The marketing process culminated in a highly successful transaction that more than doubled the projected proceeds initially predicted by the independent valuers. Remarkably, the proceeds from the battery asset alone exceeded the original loan exposure by £2m.

Introduction

A UK-based fund-owned asset/project finance business in the renewable sector faced significant challenges, with over 70% defaulted loans on its loan book and a gross margin below 1%. 

The company sought help to overcome these difficulties and unlock the potential for growth and profitability.

Challenge

The primary challenge was to restructure the business, reduce the high proportion of defaulted loans, and improve the gross margin. The company needed to re-energise its revenue streams, secure new funding at favourable terms, and establish a strong market position in the U.K. green/renewable biogas construction sector.

Solution

Our renewables specialist, Phil Gerrard, implemented a comprehensive turnaround strategy. 

He assembled a dynamic new team supported by class-leading IT and processes, and achieved a significant restructuring of the loan book, reducing provisioning by more than £60m.

To optimise operations, Phil restructured the business into a "good bank"/"bad bank" model for renewables lending. The business was able to re-energise the revenue streams, achieving an average funding of over £85m per annum over a four-year period, with a gross margin exceeding 15% and capturing a 30%+ market share in the funding of UK green/renewable biogas construction projects.

A new revolving credit facility (RCF) at a significantly lower coupon was sourced through Investec, enabling an "internal" refinancing of the original portfolio.

Results

Through Phil's strategic intervention, the company achieved remarkable results:

- Refinanced £200m of the performing portfolio to leading institutions such as Aviva, Allied Irish Bank, and Investec, including full valuations on initial equity positions.

- Grew the loan book to over £500m in 2020, with a positive net asset position and a pipeline exceeding £1bn.

- Achieved a net profit of more than £2m for the "good bank" within 18 months.