Greencells: Bond as a “first step to establish ourselves permanently on the capital market”

Solar energy company Greencells debuts in the bond market. The secured “green bond” will be offered 6.25 percent interest, the issue should have a volume of up to 25 million euros and the money should further boost the solar park project business of the profitable company. If Greencells CEO Andreas Hoffmann has his way, this will not be the company’s last issue: They want to establish themselves as an issuer with investors. In the long term, the company’s managing director does not want to rule out an IPO of Greencells. Greencells might not be known to most investors. Can you briefly introduce the company in just a few sentences?

Hoffmann: With an installed capacity of over 2.1 GWp, Greencells GmbH is one of Europe’s leading and globally active EPC and O&M service providers for utility-scale solar power plants. Together with our sister company Greencells Group Holdings, which operates worldwide as a photovoltaic project developer, we have the know-how in all project phases to optimally plan, finance, implement and operate solar projects from a single source. First of all, the question that every company is currently allowed to listen to and that you will not be spared: How did you get through the pandemic crisis and how are you currently doing in the second COVID-19 wave?

Hoffmann: Due to the COVID-19 pandemic, projects were postponed in the first half of 2020 to the second half of 2020 and 2021 – but not a single project was canceled. We are currently not feeling any further noteworthy effects. That is why we are assuming – also thanks to strong catch-up effects – that we will be able to close the 2020 financial year with sales on a similar scale to 2019. Despite all the uncertainties among investors, Greencells is issuing a bond with a volume of up to 25 million euros at 6.5 percent interest. Recently, issues have been problematic due to the environment and issuers have withdrawn emission plans. You don’t. Why?

Hoffmann: It’s very simple: We are absolutely convinced of the attractive overall package that we have developed with DICAMA AG and ICF BANK AG. That is why we made a conscious decision together to carry out the issue. And the previous investor feedback confirms our decision. Our secured green bond, for example, was not only subscribed by the European Mittelstandsanhaben FONDS, but also rated 4 out of 5 stars in the KFM Mittelstandsanhaben-Barometer and thus classified as “attractive”. We see this result as a special quality assessment, because as KFM Deutsche Mittelstand AG has confirmed, we are one of only very few new issuers whose debut bond was rated with 4 stars. Greencells currently operates as a GmbH with an equity ratio of 26 percent. Would an IPO as an AG or SE be conceivable for you? They work profitably, comparable companies have certainly written success stories on the stock exchange and renewable energies are considered a growth market that is well received on the stock market …

Hoffmann: You are absolutely right: Our profitable development as well as the growth market of renewable energies – and here the solar market with its brilliant prospects in particular – are ideal conditions for a success story. That is why we also decided to issue bonds. We see this measure as the first step to establish ourselves permanently on the capital market. It remains to be seen whether we will issue further bonds or go public in this way. But we will certainly not rush into anything here; instead, we will initially focus on earning the trust of bond investors over the long term as a new issuer. Are you worried that investors will feel put off by the equity ratio?

Hoffmann: No, by no means, because we have a solid equity ratio that is set to increase gradually over the coming years. And what also speaks for us: In the EPC area, we are considered to be unreservedly “bankable” and can therefore secure the financing of our solar projects during the construction and operating phases via a resilient network of financing partners. We work with German and international banks, including BayernLB, Kommunalkredit Austria, Triodos Bank, NordLB, LBBW and the European Regional Development Fund (EFRE). In the area of ​​financing solutions, we cooperate with insurance companies such as Swiss Re, Munich Re and Tokyo Marine. We also maintain close relationships with leading investment funds in the renewable energy sector such as Blue Elephant Energy, Enlight Energy, Next Energy and Nordic Solar Energy. They offer investors 6.5 percent interest. There is also a security concept. What made you – with your quite large financing network – to take this financing route instead of using possible alternatives, such as bank financing or through your anchor shareholder, the Zahid Group?

Hoffmann: We have always developed our company in a very targeted manner since it was founded in 2009. This also applies to our financing structure. After the strategic entry of the Zahid Group, which initially provided equity and then debt capital to finance our growth, we see our secured green bond as the next logical step and, above all, as an important additional component in our financing mix. You have had a sister company since 2018, Greencells Group Holdings Ltd. based in Dubai, which is not part of the Greencells GmbH group. What is the specific relationship between the two companies? How is the cooperation structured and secured?

Hoffmann: Greencells GmbH is operationally, economically and personally independent of its sister company. The EPC and O&M business has so far achieved significantly higher sales and earnings, and orders have so far been generated primarily with third parties, often with long-term customers.

Since the founding of our sister company for project development, we as a whole group have been able to map the entire value chain from development to financing and implementation to the operation of solar power plants from a single source. As the issuer of the secured green bond, Greencells GmbH benefits significantly from this integrated business model of the group, since all development projects of the sister company are transferred to it 100 percent in the form of fixed EPC and O&M contracts and accordingly – in addition to the long-established business for external clients – ensure stable and visible cash flows. The project development of the sister company is therefore an essential value driver because it also fills the EPC and O&M pipeline of Greencells GmbH through increased sales with higher margins, which results in further predictable sales. The funds from the secured green bond are intended to significantly increase the scope of project development and thus also the scope of the EPC and O&M contracts. What securities are bond investors offered?

Hoffmann: The collateral package includes projects from our sister company in Germany, Italy, France, Spain and the Netherlands that are pledged to a trustee. According to the report, the net collateral value based on current market data is 34.5 million euros. This value contrasts with a bond volume of up to 25 million euros or a total volume for interest and repayment of a total of 33.125 million euros. In addition, receivables from EPC contracts of the issuer for solar projects of at least 10 million euros are assigned as security. In addition to the collateral, the sister company has a credit line in favor of the issuer for up to 33.125 million euros until December 31, 2025.


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