Zenobē secures up to £241m in ‘first of its kind’ debt structure to aid growth plans in the electric vehicle sector
Zenobē Energy, the leading EV fleet and battery storage specialist, has established a multi-source debt structure of £241m to radically accelerate the expansion of the EV fleet sector. The first of its kind funding platform, advised and structured by NatWest, draws on the support of several financial institutions, and will enable Zenobē to initially service and finance up to 430 new e-buses in the UK and Ireland.
The innovative structure takes total debt finance support from financial institutions to over £300m. Since 2017, the company has also raised equity of over £220m, including a £150m investment in November 2020 from Infracapital, the infrastructure investment arm of M&G, which has allowed Zenobē to provide services and finance the acceleration of the UK’s transition to a green road transport system. The institutions took into account the green credentials of Zenobē, and the debt’s application and the company benefited from reduced financing costs accordingly.
This transaction is an innovative and bespoke funding package which will play a vital role in financing Zenobē’s turnkey fleet electrification offering. The multi-source debt structure will enable the company to raise senior debt financing against the service contracts that Zenobē has entered with bus operator customers.
The structure comprises long-dated term financing, including from UK private placement institutions Aviva and Scottish Widows, alongside a shorter-term facility provided by six banks (Lloyds, MUFG, NatWest, Santander, Siemens and Sociētē Gēnērale) that is intended to fund capital investment to support e-bus and charging infrastructure provided under service contracts to bus operators. The funding platform will be used to raise additional financing over time, and in doing so broaden its funder base as Zenobē expands fleet activities in the UK and Ireland.
Zenobē is a UK market leader in EV fleets and battery storage, with 175mw of operational and contracted storage assets and 394 EV buses or an estimated 25% market share of the UK operational EV bus sector. It currently works with all major bus operators in the UK including Arriva, Abellio, McGills, National Express and Stagecoach, as well as local authority owned bus companies, and is enabling the faster take up of EV buses in the UK, helping to meet legally binding climate change targets and improve air quality across the country. Zenobē’s services can act as match funding to government grants, enabling the available grant finance to go further and bring more electric buses onto UK roads.
Nicholas Beatty, founder director, Zenobē Energy, said: “This is an incredibly exciting step for both Zenobē and the transport sector as a whole. This innovative funding structure marks the coming of age of structured finance solutions for fleet electrification, and signifies substantial growth for our business, allowing us to accelerate the rollout of electric buses across the UK. “We are delighted to have worked with NatWest to complete this ground-breaking financing of a new asset class for the market. The funds we are able to draw on from our new and existing funding partners through these and future contracts will support Zenobē in our aims to assist our customers to achieve the UK’s vehicle electrification targets.”
Mark Cumbo, director, specialised & project finance, Santander UK, said: “We are delighted to provide Zenobe with this funding that supports its turnkey fleet electrification offering. This follows funding we provided this exciting client last year in support of the construction of its flagship 100 mw/107 mwh battery at Capenhurst, near Chester, which will be one of Europe’s biggest batteries and the world’s first to absorb reactive power directly from the transmission grid.”
Andy Matthews, head of Greenfield, Infracapital, said: “We are delighted that Zenobē has secured additional funding to support its expansion plans. There is a critical need to decarbonise the transport system and Zenobē is leading this transition. There is a significant opportunity for continued growth, both in the UK and internationally, and this innovative, bespoke funding solution will further enhance Zenobē’s ability to deliver long-term, sustainable solutions to its customers.”
Joe Taylor, head of infrastructure & asset finance at NatWest, said: “We are thrilled that the pioneering funding platform we’ve advised Zenobē on will help speed up the use of electric vehicles and create a greener transport system in the UK. “NatWest has set out a clear ambition to play a leading role in helping to address the climate challenge, a key part of which is developing financing structures for innovative businesses that are moving to greener energy. We look forward to continuing to work with businesses to empower them to deliver on their green ambitions.”
Documents were prepared and negotiated by Zenobē with the assistance of NatWest as debt advisor and Allen & Overy as the legal advisors. The funders were advised by Clifford Chance.