NAB opens Low Carbon Shared Portfolio to investors
Major Australian organisations are now directly investing in large-scale renewable energy projects through the new NAB Low Carbon Shared Portfolio, the first of its kind in Australia.
Announced in December 2017 as an offering under development, the finance facility has now been finalised, valued at $200 million, with investors including the Clean Energy Finance Corporation (CEFC) with a $90 million investment, and Insurance Australia Group Limited (IAG).
The NAB Low Carbon Shared Portfolio gives these companies access to a portfolio of eight NAB loans that fund seven existing wind and large-scale solar projects in Australia, projects they wouldn’t otherwise be able to invest in directly.
The electricity generated by the seven renewable energy projects avoids more than 2,500,000 tonnes of CO2 emissions every year, which is equal to the emissions created by over 350,000 Australian households.
“Renewable energy is an important part of Australia’s future energy mix, and our customers are telling us they want to participate in the transition to a low carbon economy,” NAB Chief Customer Officer of Corporate and Institutional Banking, Mike Baird said.
“We’re responding by providing ways for institutional investors to back major renewable energy projects alongside NAB, while releasing capital for NAB to continue to reinvest in the renewables sector.”
The Low Carbon Shared Portfolio is part of NAB’s updated climate change strategy. In 2017, NAB committed to increasing environmental financing for customers from $18 billion by 2022, to $55 billion by 2025. This includes $20 billion to support green infrastructure, capital markets and asset finance, and $35 billion of lending to support the development of 6-star residential mortgages. As at 31 March 2018, NAB has provided $17.5 billion towards this commitment.
Since 2003, NAB has arranged over AUD$7 billion in renewable energy project finance.
The Low Carbon Shared Portfolio is a closed-end offering that gives investors an interest in a portfolio of loans to Australian-domiciled companies operating renewable energy projects. The loans are all denominated in Australian dollars, and have a remaining tenor of at least 15 months.
The loan portfolio has an expected weighted average life of 3.2 years. NAB will retain no less than 25% of each low carbon loan on its own balance sheet for the life of the investment, and will absorb the cost of managing them. The secured, floating rate, amortising Portfolio Notes are the first Australian Climate Bond certified project bonds. Investors in the notes will receive principal and income from the Trust’s loans on an amortising, pass-through basis.