CleanCapital and CarVal: Partners in Renewable Finance Growth and Innovation

  • April 9, 2018
  • /
  • Matt Eastwick

This was originally published by Matt Eastwick on LinkedIn.

When I started at CleanCapital last year, I joined a team that was already making a mark in transforming the clean energy finance market. By bringing efficiency to deal process, we continue to make great strides in simplifying investments with the goal of introducing more institutional investors to the renewable markets. We achieved another significant milestone last week by signing a $250 million equity partnership with CarVal Investors, a well-established investment firm, that enables us to acquire $1 billion in clean energy assets. The purpose of the deal is to provide the capital and other resources to support our rapidly growing pipeline of solar acquisitions. It also puts the pieces in place for us to achieve a number of financial market objectives.

Building a Flexible Capital Base

There are a broad range of acquisition opportunities emanating out of CleanCapital’s origination program, and this deal gives us the ability to apply the right capital and structure to each one. Solar projects are underpinned by a robust base of high-quality contracted cash flows, and having a degree of flexibility allows us to optimize each investment opportunity.

Adoption of Technology Platform

Our use of data and technology is one of CleanCapital’s many differentiating characteristics in the market. By having an institutional partner that completely onboards and digests deal information through our proprietary technology platform, we believe that we are making advancements in streamlining the institutional investment process.

Efficient Acquisitions

To date, we’ve acquired nearly $100 million in operating solar, leveraging our proprietary platform to streamline and expedite due diligence, closing complex deals across ten states. We cut out the middle man, which means better prices. Our proprietary platform systematically processes due diligence and analysis, allowing deals with a wide range of complexity to all close in less than 60 days. Examples of our portfolios include assets such as a 100kW system in California (power sold to a hospital), a 1.2MW system in Colorado (power sold to a university) and a 2.4MW system in New Jersey (power sold to a Fortune 100 company).

C&I; Solar Securitization

CarVal is a seasoned practitioner in the structured products market and shares our view that the most efficient debt can often be found there. Together, we will be working towards the first “pure” small scale solar C&I; securitization transaction. Being able to pool these assets and to tranche (or divide) them according to risk, the core tenets of securitization, will open up additional financing markets going forward.

In addition to CarVal’s equity commitment, we will access up to $750 million of debt capital that, in total, will provide for up to $1 billion in the coming months and years. The first tranche of this capital is being deployed immediately, and this stockpile even further accelerates our speed and ability to execute deals.

The rationale of the transaction can be summed up by the words of CleanCapital CEO Thomas Byrne, “We leverage data and technology to attract more investors to clean energy and accelerate clean energy adoption.”

We believe that CarVal, with its 30-year track record focused on credit-intensive investments and market inefficiencies, is the type of nimble, innovative capital partner that fits perfectly into CleanCapital’s capital markets strategy. Combined with our best-in-class underwriting and straight-forward approach to asset management, this deal brings us one step closer to our overarching objective of bringing great investment opportunities to a broader investor base. Clean energy projects provide solid, high-performing cash flows and should be a staple of every institutional investor’s asset allocation.