DLA Piper pioneers successful portfolio financing

DLA Piper’s energy sector legal experts in New Zealand, Rachel Brown, Martin Thomson and Pavanie Edirisuriya, are pleased to support Aquila Clean Energy APAC and New Zealand-based independent developer Far North Solar Farm (FNSF) to successfully close a landmark portfolio financing deal with Westpac New Zealand Limited. Completed in May 2024, this pioneering transaction marks several significant milestones for the renewable energy sector.

The financing, structured on a fully merchant and non-recourse basis, is the first of its kind by a foreign investor in New Zealand. The portfolio includes four solar farms with a combined capacity of approximately 180MW. The Pukenui Solar Farm is set for commissioning in 2025 and remains open to power purchase contract opportunities.

Rachel Brown, Banking and Finance partner at DLA Piper, highlighted the efficiencies brought by portfolio financing, such as cost synergies and streamlined resource allocation for construction contractors. “Given the project’s structure and merchant risks, there was an increased emphasis on certain due diligence aspects,” Brown noted.

The pioneering portfolio financing also brings strategic advantages through removing the reliance on an offtake agreement to achieve financial close, and therefore mitigates several risks for the sponsors. The financing structure also includes provisions for increased gearing if power purchase agreements (PPAs) or offtakes are incorporated.

Co-leading DLA Piper Corporate partners on the transaction, Martin Thomson and Pavanie Edirisuriya, also acknowledged the comprehensive efforts required to secure necessary consents for the portfolio, including under the Overseas Investment Act – particularly as the first offshore investment in solar farms in New Zealand.

The deal is significant for foreign investments in New Zealand’s solar and renewable energy sector. DLA Piper’s cross-border capability uniquely positions the firm to help clients with their innovative and sustainable energy projects, reinforcing New Zealand’s transition to a renewable energy future.

Maree Myerscough, Chief Operating Officer and General Counsel at Aquila Clean Energy APAC, comments “Martin, Pav, Rachel and the DLA Piper team have been invaluable with their pragmatic and commercial approach, timely communication, and extensive expertise. The team has been a pleasure to work with and we are appreciative of the support that they have provided to the Aquila Clean Energy APAC to reach this milestone.”

Other legal advisors included Ashurst, Anderson Lloyd, and Tompkins Wake. Mafic Partners were the lead financial advisor on the transaction.

DLA Piper is at the forefront of the rapidly growing renewable energy market in New Zealand, particularly with power purchase agreement backed lending and related financing agreements. The firm acted on a market first securitisation of household solar receivables, which went on to win Securitisation and Structured Finance Deal of the Year at the IFLR Asia-Pacific Awards 2024 in Hong Kong and Finance Asia’s Best Sustainable Finance Deal 2023. The transaction was also a finalist for Debt Deal of the Year at the New Zealand Institute of Finance Professionals New Zealand (INFINZ) Awards 2024.