As a result, Loiste Oy, the parent company of Loiste Group, which is an important utility player in Finland, has been able to refinance existing debt and related costs.
Through its CIF II fund, Vauban IP acquired a 20.34% stake in Loiste Group in April 2019. Since then, Vauban IP has repositioned the company to implement best practice infrastructure debt refinancing, as well as updating the business plan to smooth the Capex process, increase connection fees and prepare for a retail division merger.
The refinancing included an institutional private placement of c. €260m over a 15-year term and a bank loan of c. €60m over seven years. The package also includes capex facilities of c. €110m and a revolving credit facility of c. €40m. In the process, there is considerable margin improvement, better overall company leverage profile and a more flexible covenant structure. As a result, there is more flexibility to diversify Loiste’s business activities in the future.
Most notably, the refinancing allows the company to more efficiently manage its substantial Capex plan which will enable Loise to develop its DSO capabilities over the decade from 2020-2030. A DSO (Distribution System Operator) securely operates and develops an active distribution system comprising networks, demand, generation and other flexible. Loiste’s aim is reach the regulatory 25% Medium Voltage cabling rate by 2028 through network renewal and underground cabling. The new Capex will help the company to increase the security of its electricity supply and withstand severe snow conditions, adding value for all its stakeholder including Vauban IP.
The cash yield profile of Vauban’s investment is well improved with that refinancing while mitigating long-term risk on interest rate thanks to the long tenor of the financing structure.
For further reading:
- Natixis Investment Managers continues to strengthen its alternative and real asset capabilities with the launch of Vauban Infrastructure Partners
- Building Infrastructure Portfolios for the Long-Term
- Infrastructure: Let’s Get Personal
- Equity Infrastructure: Decorrelated, Long-term Income
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