Foresight Italian Green Bond Fund lists €17.3m LED lighting project bond for six municipalities in Italy  

London/Rome, 1 February 2019

Click here to read the full announcement.

• The first project bond in Italy to be issued for financing greenfield projects
• The first project bond for street lighting across multiple municipalities
• Sponsored by Pagano & Ascolillo S.p.A. (“P&A”), the established E.S.Co with 30 years public works experience, fully subscribed by the Fund and listed on Borsa Italiana ExtraMOT PRO
• 28,578 street lights to be replaced
• Senior secured project bond, 5.82% coupon, 20-year tenor

Foresight Group LLP (“Foresight”) announces the €17.3 million arrangement and subscription of a Project Bond issued by Pagano & Ascolillo S.p.A. and listed on Borsa Italiana (“the Bond”), for the installation of LED street lights in six municipalities in Umbria, Molise and Campania, on behalf of the Foresight Italian Green Bond Fund (“The Fund”).

The Bond, which is the first project bond to be issued in Italy for the financing of greenfield projects, has been innovatively structured such that P&A Public Lighting S.p.A. (“the Issuer”) will draw down from the Bond as required to provide funding as projects are awarded and progressed.  It is also the first project bond for street lighting PPP projects across six different municipalities.

The initial drawdown of €7.25 million will finance c. 10,000 street lights in two Campania municipalities, Polla and Giugliano.  The balance of c. €10 million will be held for drawdown against future PPP projects once PPP concessions and other customary conditions precedent are satisfied.

LED street lighting is an established energy efficiency technology, providing street lighting that is both cheaper and more controllable.  The environmentally friendly technology features remote operation, real-time control systems for power demand balancing as well as improved brightness control, monitoring and fault detection, and is estimated to be 40% - 60% more efficient, lasting four times as long as conventional solutions.  The total project is expected to reduce CO₂ emissions by more than 17,000 tonnes each year.

The Bond is senior secured, with a typical project finance security package, and will be fully amortising with semi-annual interest and capital repayments.

P&A is listed on the ExtraMOT PRO - ISIN: IT0005359077 - the Borsa Italiana’s segment dedicated to green bonds, offering institutional investors the possibility of identifying those that adhere to the Climate Bonds Initiative and are compliant with the International Capital Market Association’s (“ICMA”) Green Bonds Principles.

Diomidis Dorkofikis, Director of Foresight, commented: “This is the Fund’s second project and demonstrates Foresight’s ability to provide innovative financing for multiple regional projects in smaller renewable energy and energy efficiency sectors. The investment offers returns uncorrelated to equity markets and makes a direct contribution to the Italian energy transition by financing real assets. The Fund is well placed to fill the funding gap for long term financing and already we are looking together with Pagano & Ascolillo to finance further projects in this sector.”

Vittorio Luisi, CEO of Pagano & Ascolillo, added: “Our business, which has been an E.S.Co. since 2009, has, for several years, been managing multiyear energy efficiency projects, including relamping.  For this reason, we are delighted to be working with such an experienced team within Foresight. They have created an innovative structure to facilitate flexible draw down which is ideal for us as new projects are commissioned.  Using a Green Bond structure has allowed us to bypass the banking system, which is notoriously slow to react to new challenges, and does not have the appetite for financing smaller projects with long tenures.”

Pietro Poletto, Global Head of Fixed Income Products and Co-Head of Equity, Funds & Fixed Income – Secondary Markets, Borsa Italiana commented: “We are delighted to welcome P & A Public Lighting SpA, which with its pioneering operation becomes the first issuer to list an infrastructure bond on Borsa Italiana’s ExtraMOT PRO Green & Social segment for the financing of greenfield projects. Today Borsa Italiana becomes an institutional partner for greenfield works which will help increasing the transparency of infrastructural operations of public value."

Carlo Montella, Raul Ricozzi and Francesca Isgrò from the Energy & Infrastructure team at Orrick commented “We were delighted to have been involved in a transaction where the complex legal issues surrounding PPP, public lighting, green field and incremental value of the bond gave us the chance to support, as per our history, the structuring of a truly innovative financial transaction.”

Francesco Labruna and Mario Della Porta of Sogec Advisor with the technical support provided by Daniele Filizola from Filizola S.r.l., acted as financial adviser to the Sponsor, commenting: “This is an important milestone in the field of the issuing of “green” bonds rendering the public lighting of various Italian council districts more energy efficient. It will be the residents and businesses in those areas who will benefit most.”

Advisers on the transaction:

Legal Adviser: Orrick

Financial Adviser (Sponsor): Sogec Advisor S.r.l

Technical: Protos