Design Funding grant recipient Albion Capital, a Brazilian asset management firm, and Órigo Energia, have successfully closed Green FIDC Solar SD at USD 35.8 million (BRL 201 million), the first FIDC issued as a green bond in Brazil. The announcement comes two weeks after the close of Brazil’s first Green CRI, a spinoff from the Green FIDC, which secured USD 14.3 million (BRL 80.1 million). Together, the two vehicles raised USD 50 million (BRL 281.1 million).
The Green FIDC allows clean energy and energy efficiency projects to secure financing based on future cash flows from energy sales. The Green FIDC builds on a Brazil-specific instrument, the Fundo de Investimento em Direitos Creditórios (FIDC), which is used by companies to raise capital by securitizing receivables.
Albion Capital and Climate Policy Initiative received design funding in 2019 for the Green FIDC concept, which was proposed and developed as part of the Global Innovation Lab for Climate Finance (the Lab). Design funding was used to support the research, structuring, and fundraising activities required to bring the Green FIDC model to Brazilian capital markets.
“What attracted us to this concept was how Albion Capital adopted an instrument already familiar to Brazilian investors, the FIDC, and applied it to green projects for the first time,” says Joan Larrea, CEO of Convergence. “Making it possible, through blended finance, to attract local institutional investors in Brazil – not only a large financial market but also a critical country to our global climate goals – into climate-related projects.”
Renewable energy and energy efficiency projects are a crucial component of Brazil’s 2030 climate goals. The country aims to increase energy efficiency by 10% and for non-hydro renewables to account for 23% of total power generation.
The Green FIDC and the Green CRI are each the first of their kind of security to be certified green for the Brazilian market. Certification is handled by the rigorous global standards of the Climate Bonds Initiative.
For next steps, Albion Capital is currently investigating an expansion of other variations of the Green FIDC concept into different vehicles that match investors’ risk-return preferences. The goal is to allow a faster and simpler scale-up process for other sectors, such as water infrastructure.
For more information, read the press release.