France: Launch of Eiffel Energy Transition, a new fund dedicated to financing energy transition, with the support of the European Investment Bank
23 March 2017
The European Investment Bank (EIB) – the EU bank – and Eiffel Investment Group have announced the launch of the Eiffel Energy Transition fund, with the backing of a number of top-ranking institutional investors.
Eiffel Energy Transition finances the green economy and energy transition in France and Europe. It provides an unprecedented response to a critical gap in the sector by making available bridging finance before long-term financing has been put in place.
The companies to which the fund lends are developers of renewable energy (photovoltaic, wind, biogas, biomass, etc.) and energy efficiency operators (electricity storage, thermal renovation of buildings, low energy consumption lighting, etc.). There are considerable financing requirements in view of the massive investments planned over the coming years, in terms of both renewable energy generation and energy efficiency solutions.
The fund addresses these needs via an original approach: granting short-term loans to developers while they wait for long-term financing for their projects. The main benefit for borrowers is to immediately free up equity without having to wait for long-term financing for their projects. As a result, they can develop more projects by redeploying their equity in pursuit of new opportunities
“Eiffel Investment Group's main strategic objective is to develop high value-added economic and social financing tools. Financing energy transition is one of our priorities”, remarked Fabrice Dumonteil, Managing Director of Eiffel Investment Group. “The Eiffel Energy Transition fund, designed in conjunction with key operators in the industry, reflects our desire to intelligently direct the resources of long-term financiers to the priority needs of the real economy and to financing the green economy.”
“This is an innovative financing operation which meets a key objective of the Paris Agreement whilst promoting a rapidly changing sector”, said EIB Vice-President Ambroise Fayolle. “Climate action is a priority of the EU bank. With 35% of its activity in France dedicated to climate action in 2016, the EIB has already exceeded the EU’s 2020 target of 25%. Our objective is to facilitate project promoters’ access to financing and thus support them in their development projects for secure and competitive environmental transition.”
The EIB’s participation in this fund (EUR 40m) also benefits from the support of the European Fund for Strategic Investments (EFSI) – a core element of the Investment Plan for Europe, better known as the Juncker Plan. In addition, Eiffel Investment Group has been granted financing terms tailored to the sector and the type of investment. With this new financing, the Juncker Plan is continuing to flourish in France with 60 operations approved to date, which are expected to generate EUR 22bn of additional investment.
Laurent Ménard, Director of Investment Strategy and EU Financing at the Commissariat Général à l’Investissement (Office of the Commissioner General for Investment – CGI), and Ivan Faucheux, Director of the Energy and Circular Economy Programme at the Commissariat Général à l’Investissement, stated: “The Commissariat Général à l’Investissement hails the launch of this innovative fund and the EIB's participation under the Juncker Plan, in support of the development of energy transition projects.”
The loans granted by the fund will typically have a term of 6-36 months. They are senior loans backed by the assets that they are financing, with a reasonable loan-to-value (LTV) ratio (between the loan and the assets financed) and generally without recourse to the developer. Each loan is intended to be paid back when the project promoter obtains long-term financing. The rates practised, which are higher than the long-term financing rates for ongoing projects, compensate risk-taking at the time of construction as well as the flexibility and swiftness of the proposed solution.
The fund's manager Pierre-Antoine Machelon stated: “This fund fills a gap in a sector where there is, in fact, no lack of financing. It stands out by virtue of its unique approach: we operate upstream of traditional lenders, with project security, generally without recourse to the developer, and we allow flexibility of use, which serves to optimise the raising of long-term finance. This is precisely when the developer needs capital to successfully conclude its project and demonstrate its value. With this new solution, we will help to speed up the transition to a carbon-free economy. A number of developers have already initiated discussions with us to arrange this financing, reflecting the strong interest of the sector's operators in this financing solution.”
Daniel Bour, CEO of Générale du Solaire and Chairman of the trade association Enerplan, commented: “The sector has to deal with technological and regulatory breakthroughs and, at the same time, must invest massively to foster energy transition in our country and on our continent. There is therefore a huge need for a flexible tool such as that offered by Eiffel Energy Transition to supplement long-term bank financing. My experience with Eiffel in 2016 has convinced me that this is a useful operational tool for us as developers of solar energy in France.”
Nicolas Mayaud, Managing Director of Helexia added: “Local renewable energy generation and energy efficiency are increasingly becoming integrated, especially with own consumption solutions. We have noted that Eiffel Energy Transition financing is particularly suited to this new business model.”
Eric Scotto, CEO of Akuo Energy, said: “This sector is highly capital-intensive. Developers need to complete their projects rapidly in order to cover their costs. The Eiffel fund, which we expect to finance one of our projects in the coming weeks, has come along at just the right time: thanks to Eiffel, we will be able to invest massively in a biomass plant project in Croatia which is at the final development stage, ahead of the signing of long-term financing operations with banks and institutional investors.”
Eiffel Energy Transition is one of the first funds to have received the French Transition Energétique et Ecologique pour le Climat (TEEC) [Energy and Environmental Transition for Climate] label, awarded by Novethic.
Eiffel Energy Transition's initial investors have committed nearly EUR 100m. Other public and private institutional investors are completing their due diligence procedures and will soon be joining the fund. The target commitment amount is EUR 200m.
Kramer Levin Naftalis & Frankel provided advisory services when the fund was being set up (Hubert de Vauplane, Valentine Baudouin).
Eiffel Investment Group, an asset manager specialised in debt and equity financing, has announced that its Eiffel Energy Transition fund recently achieved its initial objective of EUR 200m in commitments. After just eight months of operation, the Eiffel Energy Transition fund has already put EUR 100m into 272 renewable energy projects, exceeding expectations and confirming its relevance.
Eiffel Investment Group and CN Solutions, a subsidiary of the Effy Group, presented their new joint project at a meeting held in conjunction with the European Investment Bank and ADEME (National Agency for the Environment and Energy Management) on the topic of financing the energy transition. This project to optimise the energy consumption of two production sites of SOVIPOR-La Trinitaise (OLMIX Group) illustrates the relevance of the innovative financing model implemented by Eiffel Investment Group in support of energy efficiency.