AIB has invested €8.5 million in loans in Irish-based solar energy firm BNRG that are convertible into equity if the business goes about raising funding, which it is expected to do next year.
BNRG currently has a solar development pipeline of 2.7 gigawatts (GW) across Ireland, the US, UK and Australia, equivalent to about half of peak electricity demand in the Republic, in addition to 23 megawatts (MW) of operating assets in the US.
AIB’s investment will help fund BNRG’s ongoing development pipeline, which aims to have 1.8GW of solar energy products installed or under construction by 2025, the two companies said in a joint statement on Tuesday.
BNRG, set up in 2008 by chief executive David Maguire and which currently has a team of about 45 people, has sold off about 90 per cent of the 290MW of solar projects it has developed to date, including 58MW in the Republic, to recycle capital into new developments.
However, Mr Maguire told The Irish Times that the planned equity raise next year will help the group move from being a developer and seller of solar projects to become an independent power producer that holds on to assets over the long term.
“That’s the fundamental shift that we are looking to achieve with the business,” he said, adding that the size of the planned equity raise next year will be determined by an acquisition strategy that the company is working on. “We are actively looking at a number of portfolios in the US, Ireland, the UK and Australia,” he said.
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Mr Maguire said that the value set on the business at the time of an equity rise would determine the stake that AIB would be entitled to take on converting its €8.5 million debt investment. BNRG is currently in discussions with a number of financial advisers, with the aim of selecting one to manage an equity raise “towards the end of the first quarter” of 2023, he said.
The CEO said that BNRG would likely follow up with a further, larger equity raise in the coming years. He said that he is agnostic about whether the company should ultimately float on the stock market or secure a majority financial or strategic investor.
AIB’s investment follows a recent partnership between Impax Asset Management and BNRG to deliver portfolios of solar energy projects, with an initial focus on the US and Ireland.
In the US, BNRG aims to take 70MW of projects into construction in Maine in the coming months. In Ireland, BNRG was recently successful in winning CFD (contract for difference) contracts in the Renewable Energy Support Scheme 2 auction for four projects totalling 55MW in Cork and Kildare, with construction expected to commence early next year.
BNRG has also recently re-entered the UK, after a period of success between 2011 and 2017.
Finlay McFadyen, head of AIB investment banking, said the bank’s investment is part of its “ambitious strategy to help address the challenges of climate change by providing funding to companies and projects that are helping to create a cleaner and more sustainable future”.
