Introduction of new financing structure for larger projects
Disclaimer: This article does not claim to fully explain all risks. Please always read carefully the project-specific risk notes.
ecoligo is scaling up its positive impact: we will soon launch a collaboration with senior lenders to support the financing of larger solar projects on our platform. Through this new structure, we want to realise even more projects in the future and, most importantly, fully finance them faster. In this way, we can further increase our positive impact and fight the climate crisis even more effectively.
The senior lenders will mainly come into play as financiers for larger solar projects with a high financing volume. When investing in projects with senior lenders, results in an increased risk for you as a crowdinvestor, which will be reflected in an increased interest rate. For projects that have already been published and those that continue to be financed without senior lenders and are not integrated into their portfolios, nothing will change. We will mark projects on the platform accordingly so that they are easily identifiable. More information on the new financing structure and on the measures we are taking to minimise risk for crowdinvestors can be found in the following FAQ section of this article.
Why is ecoligo now using senior lenders to finance projects?
The potential of solar energy in the countries where we are active is enormous. More and more companies want to switch to clean and low-cost solar power. In order to meet this growing interest and to be able to finance even large projects quickly, we have opted for co-financing through senior lenders. They can provide us with larger amounts of debt capital at once, giving project financing a second leg to stand on. This support enables us to kick off the construction of many and larger projects earlier and start saving CO2 emissions as soon as possible.
This is an important step for ecoligo. The decision of professional, institutional investors to support our projects shows the effectiveness of our solution and strengthens the power of crowdinvesting. Without the crowdinvestors who have funded every project so far, we would not have been able to create this track record of projects that gives additional investors the confidence to invest and the desire to be part of our mission.
Which projects will the new structure be applied to?
The senior lenders will finance projects that we operate as a portfolio in each new asset holding company. The portfolio will be limited to projects from one country, such as Vietnam. Each of these portfolios will mainly contain solar projects with a high financing volume. We plan to continue financing smaller projects through the existing operating country companies without senior lenders.
What changes for me as a crowdinvestor? Will my risk increase?
When investing in a project that is part of a senior lender portfolio, your investment risk is increased due to the financing structure. This increased risk is reflected in an increased interest rate for you on these projects.
The increased risk arises from the fact that the senior lender will be serviced in priority to you in the event of a project default. As a result, there is a risk that in the event of lower-income or higher costs than planned, only the senior secured lenders may be able to be serviced and not the receivables from the subordinated on-lending loan to the issuer (e.g. ecoligo Projects Six UG), as a result of which the latter may in turn not be able to meet its obligations with regard to the crowdinvestors. It is also planned to transfer the assets acquired in the course of the implementation of the solar projects (i.e. the solar plants themselves) to the senior lender(s) as collateral. In addition, the senior loans are to be secured, among other things, through an assignment of the receivables from the electricity sales contracts. Both the assignment as security and the assignment of receivables shall apply to all projects and assets of the respective asset holding company and shall in the aggregate secure the senior lender(s), irrespective of whether the individual assets (solar plants) were financed by a senior lender or not. The on-lending agreement with the issuer from which the crowdinvestors are serviced, on the other hand, is unsecured and subordinated.
The advantage for you as a crowdinvestor, on the other hand, is that in future institutional lenders will also carefully examine the projects and end customers in addition to ecoligo GmbH. The combination of strict project selection and due diligence of the end customers’ solvency and a business model based on responsible action and transparency applied by ecoligo reduces risks. Find out more below.
How does ecoligo mitigate project risk?
ecoligo GmbH offers its customers solar energy as a solar-as-a-service service, which means that we own and manage the energy projects financed by crowdinvestors. This allows us to provide full accountability and control to ensure that the projects are on track and deliver both the targeted environmental and economic returns.
At the project development stage, we conduct extensive technical and financial due diligence to ensure that the project will deliver the desired savings to our clients and that they, in turn, will be able to pay for the energy produced.
Projects are installed on-site by our partner companies, which must go through a qualification process before working with us. Once a project is up and running, it is remotely monitored by our asset managers in Berlin, who ensure that it is performing as we guarantee our customers. And if something doesn’t go as planned, we can usually get things back on track quickly with a team on the ground in each of our project countries together with our partners.
ecoligo’s core business is providing clean, affordable energy to businesses. Crowdinvesting makes these projects possible, but our income comes from the sale of the solar power generated. Together we make it happen: your investment makes our work possible and we have aligned interests like you. If you want to know more, you can find a detailed explanation of ecoligo’s business model here.
How much financing volume do the senior lenders take on?
It is expected that the senior lenders will take over around 60% of the financing volume of the portfolio. However, the senior lenders will not necessarily underwrite 60% of each project in the portfolio. Instead, individual projects in the portfolio may be 100% funded by senior lenders and others 100% funded by crowdinvestors. As we are already starting to fill these portfolios with projects, the first projects in these portfolios will be 100% crowdfunded. As these projects will be included in the portfolio and used as collateral for the senior lenders, you will also receive an increased interest rate to reflect the change in risk position.
How do I know if a senior lender is involved in a project?
Detailed information on the financing structure of individual projects is available on each project page in the “Description” tab as usual under the section “Legal structure” or under “Financing structure” as well as in the “Conditions” tab in the project structure. Here you will always find full information on whether a senior lender is involved in the project.
Who are the senior lenders?
The contracts with the senior lenders have not yet been signed. As soon as the negotiations are completed and the contracts are drawn up, we will publish more details and be able to provide you with more information. These are institutional investors who want to support renewable energy projects in the countries where we are active and who already have a lot of experience in financing projects in emerging markets. All senior lenders have one thing in particular in common with the crowdinvestors: the ambition to achieve positive change with their investments and to support climate protection.
If you have any further questions about the participation of senior lenders, please do not hesitate to contact us at firstname.lastname@example.org.
We at ecoligo are delighted about this new development and especially about the fact that we will soon be able to advance the global energy transition and worldwide climate protection even faster and more effectively. But without you as crowdinvestors, no projects would be possible. Invest your money sustainably today or sign up for our newsletter.
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