Enexis Holding raises half a billion Euros with its first green bond – supported by ABN AMRO

With nearly 3 million customers, 140,000 kilometres of power cables and 46,000 kilometres of gas pipes, the energy transition presents a huge challenge for Enexis.

“In line with the Paris climate accord, we’re right in the middle of transitioning from fossil fuels to renewable energy,” says Maarten Blacquière, CFO of Enexis. “In practical terms, that means massive expansion of our grid capacity. Traditionally, electricity in the Netherlands has been produced centrally from natural gas and coal. But production is now shifting more towards a decentralised model based on wind and solar energy. Add to that an increase in electric vehicles and heating from heat pumps. All these dvelopments require substantial investments in the electricity grid to make it happen.”

The icing on the cake

That’s why Enexis recently decided to issue a new bond – its very first green bond which enables investors to finance sustainable projects of the company. Issued in June 2020, the green bond has a twelve-year maturity date and a coupon rate of 0.625 per cent. Strong market interest was evidenced by the fact that the bond offering was six times oversubscribed.

“Good access to the capital market is crucial because of all the investments in the pipeline,” says Mariëlle Vogt, who will be succeeding Maarten as CFO of Enexis at the beginning of 2021. “In addition, we were looking to broaden our investor base, and as such green bonds were the perfect fit as these generally attract a new group of investors.”

Enexis is currently rated “low risk” by the independent sustainability rating agency Sustainalytics, while its overall management of ESG (environmental, social and governance) risks is assessed as “strong”. Maarten and Mariëlle stress that sustainability is in Enexis’s DNA. Indeed, as a key player in the energy transition, it has been making numerous sustainable investments for some time now. “Having one’s house in order is essential, as our strong ESG rating shows,” says Mariëlle. “A green bond is the icing on the cake.”

ABN AMRO’s advisory role

Enexis appointed ABN AMRO to structure its new green bond. ABN AMRO has issued several green bonds itself and structured green bond transactions for many of its clients since 2015. Amongst others, the bank advised the Dutch government with issuing the first green sovereign bond last year. Over the past five years, the bank has established a strong track record in green bonds.

“Investors are keen to know how companies are contributing to the energy transition, which is pivotal to Enexis's strategy and investment agenda,” says Dick Ligthart, a green bond specialist working in ABN AMRO’s Debt Capital Markets Department. “Via its green bond, Enexis provides investors the opportunity to invest in the energy transition. The company will also report on the usage of the funding  as well as the impact of the investments. ABN AMRO supported Enexis with the internal feasibility study for its inaugural green bond issue, the mandatory second opinion and the marketing towards investors.”

The bank also co-hosted the green bond roadshow presentation to investors. Given the coronavirus measures in force, the whole event was held online and all time slots were fully booked. Half a billion Euros was raised, and 25 per cent of participants were new investors.

Green Finance Framework

The green bond is part of Enexis's newly established Green Finance Framework, which defines the investment categories and corresponding investments. Enexis has outlined four categories: renewable energy, energy efficiency, electric transport and sustainable buildings. The framework allows Enexis to issue green bonds and attract other forms of green financing. ABN AMRO also advised Enexis on the development of the framework.

A team effort

Maarten says the work the bank put into preparing for and issuing the green bond was ‘very important’. “ABN AMRO supported us in every possible way. It truly was a team effort.” Dick agrees: “You work closely together for several months as part of a project team. That’s important, too, because green investors expect a green bond to truly reflect the company’s strategy and meet strict international standards. The approach of Enexis really stood out in every way and even surpassed expectations. They achieved a fantastic result – this is a textbook example of a successful green bond issue.”

Maarten and Mariëlle view that the strong investor interest in the green bond is due to the strong storyline. “Infrastructure is a solid sustainable investment, and there’s a higher return than on Dutch government bonds. Beyond that, Enexis will continue to invest in sustainable projects related to the energy transition in the medium to long term. According to calculations made by the Netherlands Environmental Assessment Agency, Enexis will need to invest an additional €1.9 billion by 2030 in the context of  the Climate Agreement. We’ll be looking to finance these initiatives with both equity and debt capital. So you can bet this won’t be the last green bond from Enexis.”

(*)Any references to “Enexis” in this article refer to the totality of activities carried out by the companies comprising Enexis Groep unless explicitly stated otherwise.