Foreign developers need not be shy of approaching local lenders for Latin American solar financing, according to Pierluigi Borgogna, head of Turin, Italy-based Thesan. The firm has built five of its six projects in Ecuador with an eight-year project finance multi-borrower amortising loan from the Corporación Interamericana para el Financiamiento de Infraestructura (CIFI), a Latin American development bank. The USD$12 million funding package is being used to refinance around 6 of the almost 7 MW of solar Thesan has developed in the country, for a total cost of $18 million. Not included in the refinancing is a 1 MW plant no longer in the company’s portfolio.
Thesan, which has ambitious regional growth plans, has also obtained a $7 million bullet revolving credit facility from CIFI “to provide support in the financing of renewable energy projects in Latin American and Caribbean,” Borgogna said. Thesan opted to go with local lenders because “only few international financial institutions have the knowledge of emerging markets like Latin America and have, consequently, the possibility to evaluate the feasibility of a project,” he said.
“At the very beginning we considered funding the first project in Latin America through European banks,” he noted. “The option was discarded when we started to consider multilateral and regional financial institutions focused essentially on the Latin America market. Thanks to their deep knowledge of the area, they are more confident in granting financing.” CIFI is a non-deposit taking financial institution that focuses on lending and advisory services to small and medium-scale private-sector infrastructure projects in Latin America and the Caribbean, up to $100 million in value.
The bank has a portfolio in which 43% of investments are in energy, including a 6% share for solar. Ecuador is its largest market, accounting for 15% of investments, followed by Dominican Republic at 13% and Colombia at 9%. Ecuador has emerged as one of the solar markets to watch in Latin America, with more than 26 MW installed so far. Thesan’s projects so far are in the southern provinces of Loja and El Oro province, in the south of the country. Thesan relied on law firm DLA Piper for the legal work on the CIFI finance deals.
“It is indispensable to rely on the assistance of experienced advisors with an international attitude which can provide you with the right support in cross-border financial transactions, and have reliable local partners,” said Borgogna.
In addition to Ecuador, Thesan is looking to develop solar plants in Mexico and Brazil. The company has been operating in the Ecuadorian market since 2012, as well as building projects in Italy and entering the Romanian market in 2013. Thesan will also be Diamond Sponsor of Solarplaza’s PV Trade Mission Southeast Asia, taking place in Vietnam and Thailand from 18-22 April 2016.
Learn more about Latin American project financing and development opportunities at the Solar PV Trade Mission Argentina and Uruguay, from 6-10 June 2016, in Buenos Aires and Montevideo. Contact us today for more info.