In what is hailed as the first of its kind, Hedcor Bukidnon, Inc. obtained a 15-year syndicated financing facility for its 69-MW Manolo Fortich run-of-river power project. The loan partially finances the project, which costs P13.3 billion. The transaction attests to the growing depth and sophistication of the Philippine debt capital markets, encouraging a commercial bank to finance a mini-hydro facility under the Philippine government’s Feed-in Tariff (FIT) regime. The transaction’s innovative structure could serve as a template for other similar small to mid-sized renewable energy projects requiring financing.
Previously, deals for similar mid-sized renewable energy projects were funded mostly by equity as borrowing cost proved to be too prohibitive. The change in the regulatory framework with increased incentives for renewable energy generation addressed market risk and significantly enhanced overall project bankability. This enabled BPI Capital to spearhead a syndicate of local banks to engage in the fledgling renewable energy space. BPI Capital acted as Sole Mandated Lead Arranger and Bookrunner for the transaction with SB Capital Investment Corp. and Asia United Bank acting as Co-Lead Arrangers.