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NAB to play middle man with investors and large-scale wind, solar

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The National Australia Bank has launched a new finance facility that will allow institutional investors to back major renewable energy projects – a first of its kind in Australia, according to NAB.

Announced in December 2017 as an offering under development, the NAB Low Carbon Shared Portfolio was officially launched on Monday, with the backing of the Clean Energy Finance Corporation and Insurance Australia Group.

The $200 million facility is backed by senior loans to seven wind and large-scale solar farms, all of which are financed by NAB, and with a $90 million cornerstone investment from the CEFC.

CEFC debt markets lead, Richard Lovell, said that this sort of investment model – while new for Australia – was likely to become more common as demand for socially responsible investment opportunities increased.

“The Low Carbon Shared Portfolio creates an opportunity for institutional investors to participate in the renewable energy sector even though they may not be able to enter into individual project financing transactions,” Lovell said.

“This offering is unique in giving investors credit exposure to the underlying projects, a significant innovation in the market.

“International superannuation and pension funds are recognising the long-term and consistent returns available from investing in large-scale renewable energy projects.

“We want to encourage the same approach from Australian superannuation funds. Given their size, superannuation funds can help underpin future clean energy investment, as well as capture the value of Australia’s growing renewable energy infrastructure to benefit their members,” Lovell said.

According to NAB, the electricity generated by the seven renewables projects avoids more than 2,500,000 tonnes of CO2 emissions a year, which is equal to the emissions created by over 350,000 Australian households.

Mike Baird, the former Premier of NSW who now heads up customer relations for corporate and institutional banking at NAB, said the new offering had been inspired by the “tremendous growth” in clean energy across the bank’s loan book.

“Renewable energy is an important part of Australia’s future energy mix, and our customers are telling us they want to participate in the transition to a low carbon economy,” NAB’s chief customer officer of corporate and institutional banking, Mike Baird said.

“We’re responding by providing ways for institutional investors to back major renewable energy projects alongside NAB, while releasing capital for NAB to continue to reinvest in the renewables sector.”

IAG CFO, Nick Hawkins, said the portfolio would enable his company to help finance Australian renewable energy projects and a transition to a low carbon economy.

“As Australia’s largest general insurer, we’re acutely aware of the effect that climate change is having and will have on communities, like more frequent and more intense storms, bushfires and weather events, and see opportunities like this as an important step forward.”

The secured floating rate portfolio notes, issued by NAB Trust Services Limited, have an estimated weighted average tenor of 3.2 years and offer quarterly principal and interest distributions.

NAB retains at least 25 per cent of each low carbon loan on its own balance sheet and continues to manage the loans for the shared portfolio. If NAB exits a particular loan, the shared portfolio will also divest.  

Pocket
  • When are these type of investments going to be available to retail or even “sophisticated” investors?
    So far as I can see you need to have multiples of $millions to invest in the instrumenst I’ve seen

  • Steve

    Is this the sort of thing you are looking for?

    https://www.blackrock.com/ch/individual/en/products/285973/

    I don’t know the index in question, and haven’t looked into this particular offering