Pension Insurance Corporation plc (“PIC”), a specialist insurer of defined benefit pension schemes, has provided £175 million (€203 million) of senior secured debt funding, as sole investor, for a further 18 solar parks. PIC has invested £777 million in solar energy to date, covering 60 solar plants. PIC made its first renewable energy investment in 2012 and has made a total investment of over £1.5 billion in the sector.
The solar parks, which are owned by Q-Energy, a leading European investor and asset manager in the renewable energy sector, have been in operation for 13 years. They benefit from the Spanish regulatory framework for the full term of the bond. This framework structures payments from the Spanish electricity system and guarantees an agreed level of return and therefore predictable cashflows to back PIC’s pension liabilities.
As part of the Environmental, Social and Governance (“ESG”) analysis of this investment, PIC reviewed the community impact, potential environmental disruption, staff health and safety, as well as project accountability. This feeds through into PIC’s in-house ESG risk assessment framework, which provides an ESG issuer score. All of these factors are reviewed on an annual basis. The parks will generate enough electrical capacity to power more than 17,300 households each year.
Key points of the transaction:
– The debt is fixed, amortising and matures in 2038, with a weighted average life of 8.5 years
– The investment is well matched to PIC’s long-term liabilities, providing cashflows in years where it is difficult to source public bonds
– The funds will be used to refinance existing debt
– Banco de Sabadell and Banco Santander S.A. acted as Bond Manager.
