BPI capital leads landmark P10-B financing for Aboitiz hydro plant

By Lawrence Agcaoili (The Philippine Star) | Updated December 18, 2015 - 12:00am

http://www.philstar.com/business/2015/12/18/1533672/bpi-capital-leads-landmark-p10-b-financing-aboitiz-hydro-plant

MANILA, Philippines - A unit of Bank of the Philippine Islands (BPI) has arranged a landmark deal for the Philippine capital markets through a syndicated P10-billion loan for the construction of a 68.8-megawatt hydroelectric power plant in Bukidnon.

BPI Capital Corp. has partnered with Aboitiz Power subsidiary Hedcor Bukidnon Inc. for the first-ever financing arrangement to fund a run-of-river hydroelectric project of this scale.

The project in Manolo Fortich is the latest foray of the Aboitiz Group into renewable energy in addition to its 22 existing hydropower plants. It 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.

Likewise, commercial banks generally shied away from renewable energy projects that were deemed as more expensive sources of electricity compared to fossil based fuels.

However, changes in the Feed-in Tariff’s regulatory framework and increased incentives have enhanced the renewable energy 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.

BPI Capital is the issue manager and bookrunner for 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, would help support the region’s growing power needs. The Aboitiz Group targets to commission the Manolo Fortich hydroelectric power plant by December 2016.

Scheduled to be operational by 2017, the Manolo Fortich plant is among the power projects that will be adding 370 MW capacity in Mindanao that year in the medium term.