The sponsor on the 70 MW Colonia Arias wind farm project, Uruguay’s Usinas y Transmisiones Eléctricas (UTE), corralled a mixture of debt and equity sources for one of this year’s more innovative hybrid financings that is serving as a model for future Uruguayan renewable projects.

While development banks and multilaterals are a mainstay in Latin America’s renewables pipeline, the Uruguayan utility opted to test the country’s equity market, alongside debt from development agencies and a commercial bank.

UTE floated a special purpose vehicle, the Fideicomiso Financiero Arias, as part of the capital raising for the project. UTE injected approximately $10.7 million in equity itself and coordinated and conducted an initial public offering that raised $42.7 million on the Montevideo Stock Exchange in December. 

UTE signed a 20-year power purchase agreement with a government-backed offtaker, which gave investors comfort, Gonzalo Casaravilla, UTE president says. 

Pension funds and individual investors bought the equity stake, with the order book four times oversubscribed when the shares went up for sale. With strong investor appetite, the utility implemented a 70% debt to 30% equity ratio. 

UTE bought approximately $8.5 million, or 20% of the IPO while investment funds bought the remaining shares on offer.

The financing package introduced new options for renewable energy funding in Latin America, Casaravilla says, and welcomed a diverse investor base in both the equity and debt segments. The IPO is likely to have a big impact on Uruguayan renewables, he says. “We’ve introduced new options for financing this sector and included support from a wide range of investors.”

The hybrid financing also featured a $71.2 million A loan from the Inter-American Investment Corporation and a $35.6 million tranche from the China Co-Financing Fund for Latin America and the Caribbean. Commercial bank BBVA rounded out the debt portion with a $17.8 million B loan. The $178 million project financing comes with a 20-year door-to-door maturity.

After the oversubscribed IPO, UTE plans to mirror the debt and equity combo structure in its next renewables financing – the 70 MW Valentines project. The Colonia Arias wind farm is set to generate some 303.1 GWh of power each year, diversifying Uruguay’s electricity mix and substituting for fossil fuels. Spanish wind turbine manufacturer Gamesa is installing 35 G114-IIIA turbines that emit 2 MW each. LF


WINNER: Colonia Arias

PROJECT: Colonia Arias

LOCATION: Uruguay 

FINANCING TYPE & SIZE: $177 million facility including a $71.2 million A loan, $35.6 million co-loan, $17.8 million loan and a $42.7 million IPO 

BANKS: BBVA, Inter-American Development Bank and the Inter-American Investment Corporation, China Co-Financing Fund for Latin America and the Caribbean 

LAW FIRMS: Clifford Chance, Ferrere