National Australia Bank’s Low Carbon Shared Portfolio facility has closed on A$200 million ($148.7 million; €128.4 million), with the Clean Energy Finance Corporation making a cornerstone investment of A$90 million.
The LCSP, announced in December 2017, is a closed-ended wholesale unit trust that allows investors to take an interest in a portfolio of eight loans that fund seven existing wind and large-scale solar farms in Australia, all of which are financed by NAB and which will reduce CO2 emissions by 2.5 million tonnes annually.
As well as CEFC’s contribution, Insurance Australia Group, the country’s largest general insurer, has made a A$50 million commitment to the portfolio.
NAB declined to name the seven projects that are being funded by the loans or any other investors in the portfolio.
The secured floating-rate portfolio notes issued by NAB Trust Services have an estimated weighted average tenor of 3.2 years and offer quarterly principal and interest distributions. NAB retains at least 25 percent of each low-carbon loan on its balance sheet and manages the loans for the shared portfolio. If NAB exits a particular loan, which are all denominated in Australian dollars, the portfolio also divests.
CEFC debt markets lead Richard Lovell said in a statement: “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.”
NAB chief customer officer of corporate and institutional banking Mike Baird added that investments in the LCSP would also release capital for NAB to reinvest in the renewables sector. Since 2003, NAB has arranged more than A$7 billion in renewable energy project finance.
The CEFC is responsible for investing A$10 billion on behalf of the Australian government. CEFC’s investments in 2018 include a A$150 million commitment to the IFM Australian Infrastructure Fund in April and a A$100 million commitment to Macquarie Infrastructure and Real Assets’ latest agriculture fund in February.