BPI Capital Corp., the wholly-owned investment banking unit of Bank of the Philippine Islands, has arranged a syndicated loan of up to P10 billion to finance the construction of a 68.8-megawatt run-of-river power plant in Manolo Fortich, Bukidnon province.
BPI said in a statement Thursday the transaction was a landmark deal for the Philippine debt capital markets.
“The deal, in partnership with Aboitiz Power [Corp.] subsidiary Hedcor Bukidnon Inc., marks the first-ever financing arrangement that funds a run-of-river hydroelectric project of this scale,” BPI said.
The project is the Aboitiz Group’s latest foray into the renewable energy in addition to its 22 hydropower plants. The Bukidnon project is among the run-of-river facilities under the Philippines’ feed-in tariff program of the Aboitiz Group.
“BPI Capital’s financing arrangement for the Bukidnon hydroelectric plant is a milestone not just for the investment bank, but serves as landmark deal for the renewable energy sector in the Philippines. Previous similar mid-sized renewable energy projects were funded mostly by equity as borrowing cost was too prohibitive,” it said.
It said while commercial banks generally shied away from renewable energy projects that were deemed as more expensive sources of electricity compared with fossil-based fuels, changes in the feed-in tariff’s regulatory framework and increased incentives had enhanced the project’s overall bankability.
“BPI Capital’s pursuit of providing innovative, industry-leading financing solutions has allowed it to spearhead a syndicate of local banks to engage the fledgling renewable energy space,” it said.
BPI Capital is the issue manager and bookrunner of the project, with SB Capital Investment Corp. as joint lead arranger and Asia United Bank as co-lead arranger.
The project, which taps into the rich hydroelectric power base of Mindanao, will help support the region’s growing power needs. The Bukidnon project’s loan facility was signed in September 2015.
HBI received Renewable Deal of the Year award from magazine Alpha Southeast Asia, besting other entries from Southeast Asia. It is the first renewable deal of the year award to be given by the magazine.
BPI Capital was recently cited by Finance Asia, a leading Hong Kong-based finance publication, as the Best Investment Bank and Best Equity Capital Market House.