Natixis IM International Finances Niche Waste Management Plants

Natixis Investment Managers International (NIMI), has helped to finance a series of waste processing plants in the UK, continental Europe and the US.

The plants provide a highly-niche service, extracting metals and aggregate from the energy-producing waste facilities.

The waste facilities first burn household and wholesale waste to produce renewable energy. The residue from that process is then recycled further, using processing plants constructed nearby.

The materials extracted include precious metals, such as gold and silver, ferrous metals such as steel and iron, and non-ferrous metals such as copper, lead, tin and zinc. The aggregate extracted can be used in construction, such as in foundations for buildings, roads and pavements.

“This is niche process, the end point in the recycling process for waste,” said Celine Tercier, Head of infrastructure finance at NIMI. “It is very important for reducing carbon emissions and important for our investors because this sub-sector provides diversification for their portfolios. There are very few transactions of this type out there.”

The total financing of the plants was €300m, of which NIMI, an affiliate of Natixis Investment Managers (NIM), contributed €20m. The financing has a seven-year bullet maturity, and a floating rate of around 350bps above Euribor. The plants have an average 11-year contract with the waste energy producers.

“This subsector aligns with our ESG strategy and we are able to put it into a Greenfin-labelled portfolio,” said Tercier.

“We also liked that the plants are already operational so there is no construction risk.” This means there is a positive and visible track record for the volumes of aggregates and metals that can be extracted and long-term contracts in place.

Forecasts for the prices of metals in the transaction were conservative, providing headroom for the lenders in case of a sharp contraction in the metals market.

The relatively high margin reflected the complexity of the deal. “Usually, we might finance a single windfarm in a single location,” said Denis Prouteau, Chief investment Officer of Private Debt at NIMI. “In this case, it’s a number of plants, diversified by geography.”

In addition, the transaction is partly correlated to the value of commodities, which are priced in dollars. The NIMI strategy is priced in euros, so as well as assuming conservative metals prices, a conservative exchange rate had to be adopted too.

Investing in more downstream elements brings a complexity premium.

“If you really want to add value for clients, you need to be able to think outside the box and execute non-standard transactions,” added Prouteau.

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