Holdco Debt and Portfolio Financings
In 2024 we saw the use of Holdco debt structures continue to increase as market participants employed more sophisticated debt platform structures for both structurally subordinated and senior secured portfolios across the full spectrum of power generation technologies . the multibillion- dollar structurally subordinated holdco financing of a 3 GW of thermal generation portfolio , as well as for the ARCH EM and Norfund backed CrossBoundary Energy on its $ 300 million senior secured holdco portfolio financing for its 500 MW pipeline of entirely greenfield projects supplying commercial and industrial offtakers .
Additional Recent Notable Matters
High interest rates and inflation continued to hamper debt sizing for the project financing of greenfield assets in certain jurisdictions . Sponsors with expensive or constrained equity for capex , including both private equity and institutional backed portfolio companies , continued to look improve the overall gearing in their portfolios through the use of holdco debt . When coupled with a string of paused disposal processes , leading PE sponsors in particular to look for ways of returning capital to LPs , resulting in a bumper year for holdco debt .
The gap in the capital structure between low margin senior PF debt and high cost equity perfectly suits the increasingly active private credit funds with their requirement for double digit IRR who are looking for exposure to the power and infrastructure market . Bracewell acted on notes issuances in holdco debt platforms to private credit funds EIG and Singaporean sovereign asset manager GIC .
With Sterling markets calming down , a number of portfolio finance transactions in the UK were able to achieve financial close . Bracewell acted for Lloyds Bank and Mizuho as Arrangers on behalf of lenders to a 450 MW holdco portfolio financing for UK thermal assets backed by Capacity Market Agreements as well on the Hitec Vision and ENI Plenitude joint venture Vårgrønn for its structurally subordinated £ 500 million debt platform for its 3.6 GW offshore wind portfolio .
In the African markets , sophisticated sponsors looked to push increasingly complex debt platform structures allowing potentially uncapped amounts of debt facilities tied to the underlying projects in the future . Bracewell acted for the lenders and private credit funds on
• Lekela Power — acting for Mauritius Commercial Bank and ABSA Bank as arrangers , bookrunners and structuring banks for the multicurrency , structurally subordinated holdco financings to a consortium led by Infinity Power and AFC for the acquisition of Lekela Power and its $ 2 billion pan-African portfolio of renewable energy projects from Actis , a leading emerging markets private equity firm
• FRV BESS Portfolio Financing — advising FRV in respect of the development , implementation and limited recourse portfolio refinancing of the 34 MW Contego and 99 MW Clay Tye utility battery storage projects powered by Tesla Megapack lithium-ion batteries
• Pan African portfolio financing — acting for Mauritius Commercial Bank and ABSA Bank , Investec and Sanlam as lenders to a PE backed pan-African power developer , on its structurally subordinated holdco financing of its multi GW pan-African portfolio of thermal power generation , with an uncapped permitted additional debt regime to support the platforms ongoing growth and acquisitions
The Year Ahead
We predict the continued use of private credit funds to provide equity capex on a structurally subordinated basis whilst commercial banks continue to expand the amount of construction risk within portfolio financing structures previously reserved for operating assets . With several processes launching in the new year , 2025 will be another busy year in the holdco debt financing space . bracewell . com