Natixis IM International finances niche waste treatment plants

Natixis Investment Managers International (NIMI) has participated in the financing of several waste treatment plants in the UK, continental Europe and the United States.

These plants provide a very specialized service, extracting metals and aggregates from waste treatment plants that produce energy.

These facilities first burn household and wholesale waste to produce renewable energy. The residues from this process are then recycled in the treatment plants built nearby.

Mined materials include precious metals, such as gold and silver, ferrous metals, such as steel and iron, and non-ferrous metals, such as copper, lead, tin and zinc. The extracted aggregates can be used in construction, especially in the foundations of buildings, roads and sidewalks.

“It’s a niche process, the end point of the waste recycling process,” he said Céline Tercier, head of NIMI’s infrastructure financing. “It is crucial for reducing CO2 emissions and important for our investors because this subsector allows them to diversify their portfolios. There are very few operations of this type on the market ”.

Total funding for the power plants amounts to € 300 million, of which € 20 million comes from NIMI, a subsidiary of Natixis Investment Managers (NIM). The loan has a duration of seven years and a floating rate of approximately 350 bps above the Euribor. The plants have an average contract of 11 years with the producers of residual energy.

“This subsector is in line with our ESG strategy and we are able to fit it into a portfolio labeled Greenfin,” notes Céline Tercier.

“We also liked the fact that the factories are already operational, so we are not subject to construction risks.” This means that there is a positive and visible history of the volumes of aggregates and metals that can be mined and of long-term contracts in place.

The forecasts for metal prices in the transaction were conservative, providing lenders with a comfortable respite in the event of a sharp downturn in the metals market.

The relatively high margin reflects the complexity of the transaction. “We usually finance a wind farm in one place,” he said Denis Prouteau, Director of Private Debt Investments at NIMI. “In this case we are dealing with several plants, spread over several sites”.

Furthermore, the transaction is partly related to the value of the commodities, which are valued in dollars. As NIMI’s strategy is denominated in euros, it was therefore necessary to choose a prudent exchange rate in addition to adopting prudent price assumptions for the metals.

Investing in more downstream elements brings a complexity premium.

“If you really want to generate added value for customers, you need to be able to think outside the box and execute exceptional transactions,” concludes Denis Prouteau.

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