Capital raising strategy for industrial symbiosis strategy
Strategic capitalization strategy through blended finance and the implementation of sustainable technologies.
The sudden global rise of interest rates has complicated capital raising in the industrial infrastructure space. At the same time, the aggravating effect of global warming, requires to ramp up investment for decarbonization efforts across all sectors. By implementing sustainable technologies and processes to industrial infrastructure, we can access capital for our clients at reduced rates, while also decreasing the carbon footprint of each project.
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Case study
Sustainable finance: Incentivizing responsible projects
In March 2023, the United Nations’ Intergovernmental Panel on Climate Change issued a stark warning regarding climate change, expressing that the “window of opportunity to secure a liveable and sustainable future” is “rapidly closing.” At the same, interest rates have risen across the globe by over 500 basis points, after a sustained period of quatitative easing. For that purpose, we have focused on developing strategic capitalization strategies for our clients, providing:
- capital needs based on optimized cap structure at reduced rates
- implementation of sustainable technologies
- impact tracking
We want to make sure that our clients fulfill their capital needs, both through debt and equity. We are encouraged that we can do this, while also having a positive impact in the environment.
Approach
The first step is to develop a cap structure that makes the most sense for our client and the project. We review the available capital for the project, the needs, and then we proceed to develop a strategy on how to best the secure the required funds.
Since a positive impact is crucial for us as a company in all we do, we have sought to innovate our capital, particularly debt, raising strategies, by implementing sustainable technologies that allow our clients to tap into sustainable financing, with a reduced cost of capital and an increased positive impact.
Through the implementation of sustainable technologies, our clients can have access to capital at optimal rates, while making a positive impact.
This approach allows industrial developers to tap credit sources at optimal rates, maximizing the project profitability from a financing perspective, but also through the resource optimization that is accomplished by incorporating key technologies to the project.
Client
This particular client already had secured the land required for the project and had acess to a credit facility that guaranteed a portion of the project, but required additional funds for overall completion.
Likewise, this strategies can be easily replicated for clients that need to complement their capitalization needs, particularly when conventional sources exceed the cost of capital required to make the project profitable.
Results
By incorporating a sustainable approach to the capital raising strategy, we increased the number of providers of capital to the client.
Apart from increasing the availability of capital and lowering rates, by developing a strategy that involves the implementation of sustainable technologies, we also increase the marketability of our clients' projects, as more end-users must comply with increased sustainable regulations.
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