Successful £60m debt financing for Iona’s UK AD renewable energy portfolio

Iona Capital has successfully closed debt financing on behalf of one of its funds, the Iona Environmental Infrastructure LP (IEILP), which invested in 11 UK anaerobic digestion (AD) facilities.

IEILP is a greenfield fund that launched in 2021 and is backed by UK pension fund investors. The investors’ funds - £60 million (€66.7 million) - were deployed to build four large gas-to-grid assets, two local authority-backed combined heat and power (CHP) assets and five agricultural CHP assets. These are all now fully operational, generating a combination of renewable electricity, heat and biomethane.

Iona engaged Investec as the exclusive financial adviser to structure, arrange and syndicate up to £60 million (€66.7 million) of senior-secured team facilities. Allied Irish Bank and Banco de Sabadell were chosen as mandated lead arrangers. The financing will enable further distributions to be made to investors.

“It is a testament to the resilience of the underlying assets and the commitment of everyone working on the project that the debt financing was completed in such challenging market conditions,” said Nick Ross, founder of Iona Capital. “It is also a significant milestone for Iona and a firm endorsement of our investment strategy in the low-carbon sector.”

Gulzar Hanspal of Investec’s power and infrastructure finance team, commented: “The transaction provides a continued vote of confidence in financing bioenergy projects, and the importance of AD in the transition towards net zero.

“We worked closely with Iona Capital and potential funders to present the high-quality diversified AD platform, benefitting from robust contractual structures and income streams backed primarily by UK Government subsidies. This resulted in considerable funder interest and a strong commitment to this well-structured financing.”

Cornwall Insight, an energy consultancy, research and analytics firm, provided gas and electricity expertise to support the successful £60 million (€66.7 million) debt financing for Iona’s AD portfolio. Adam Boorman, senior consultant at Cornwall Insight, said: “We are delighted to have played an important role in supporting this successful debt financing raise by Iona.

“Cornwall Insight’s involvement in the process saw it utilise its market-leading understanding of the gas and electricity markets, as well as its wholesale commodity and non-energy cost forecasting abilities. It also highlights our capability to successfully support key investments that will play a significant role in the pursuit of the UK’s low-carbon goals.

“We are very pleased that the debt financing has been successful in these innovative assets and that we were able to use our consultancy and analytical capabilities to support them in this regard.”

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