Green bonds Fuel Sustainable Growth

Energo-pro’s recent issuance of green bonds underscores a growing trend in corporate finance: leveraging capital markets to fund environmentally friendly projects. Green bonds are specifically earmarked for initiatives that promote sustainability, such as renewable energy progress, energy efficiency improvements, and pollution reduction. This move aligns with increasing global pressure on companies to demonstrate environmental obligation and contribute to a low-carbon economy.

The company commits to reducing carbon dioxide emissions, a common pledge associated with green bond issuances.

Strong Investor Appetite Drives Oversubscription

The bond offering, managed by financial giants Citi, Goldman Sachs, and Jpmorgan, witnessed remarkable demand, initially targeting €500 million but ultimately scaling up to €700 million due to orders exceeding €1.8 billion. This oversubscription allowed Energo-Pro to reduce the bond’s coupon rate to 8%.

Martin Rejna, Executive Director of Energo-Pro, highlighted the significance of this issuance as the group’s first green bond in euros, emphasizing the strong investor interest in the company’s sustainable initiatives.

We surpassed our expectations. We demanded EUR 500 million, but orders have grown to more than EUR 1.8 billion. We decided to increase the emission to 700 million euros.
Martin rejna, Executive director of the Energy Group

Market Dynamics and Risk Premiums

While the 8% interest rate is higher than rates for comparable European bonds, analysts attribute this premium to energo-Pro’s focus on developing markets. These markets, while offering meaningful growth potential, also carry higher perceived risks, leading investors to demand greater returns.

Tomáš Pfeiler, Portfolio Manager of Cyrrus, noted that the yield on the bonds has since decreased to around 7.6% due to continued investor demand in the secondary market. This dynamic illustrates how market confidence can drive up bond prices and reduce yields.

It is more expensive than the revenues of European risky bonds. There is a surcharge for the focus of the group on developing markets.
Tomáš Pfeiler, Portfolio Manager of Cyrrus

Improved Borrowing Terms Reflect Growing Stability

Energo-Pro’s ability to secure more favorable borrowing terms compared to its previous euro bond issuance in October 2023, which carried an 11% interest rate, signals increased market confidence in the company’s financial stability and growth prospects. This advancement comes despite global economic uncertainties and highlights the attractiveness of Energo-Pro’s investment profile.

Global Institutions Back Energo-pro’s Vision

The primary investors in the green bonds were global institutions with long-term relationships with Energo-Pro, demonstrating their continued support and commitment to the company’s strategic direction. Other significant investors included those specializing in emerging markets and high-yield bonds, further validating Energo-Pro’s position in the global investment landscape.

ENERGO-PRO’s Global Hydropower Footprint

ENERGO-PRO Group continues to solidify its position in the renewable energy sector with a diverse portfolio of hydroelectric power plants across multiple continents. Currently, the group manages 53 hydroelectric facilities distributed across Georgia, Bulgaria, Turkey, Spain, and Brazil. This extensive network underscores ENERGO-PRO’s commitment to sustainable energy solutions on a global scale.

South American Expansion: Colombia and Brazil

Beyond its existing operations, ENERGO-PRO is actively expanding its presence in South America.The company is currently constructing the Chorreritas hydroelectric power plant in Colombia,with an anticipated launch date in 2026. This project represents a significant investment in the region’s renewable energy infrastructure. Furthermore, ENERGO-PRO has recently acquired the Baixo Iguaçu hydroelectric power plant in Brazil, further cementing its commitment to the Brazilian energy market [[[2]].

Strategic Financing for Growth

To support its ongoing expansion and optimize its financial structure, ENERGO-PRO is employing strategic financing mechanisms. A key objective is to refinance existing debt and secure funding for new acquisitions. The company intends to utilize bond funds to repay bonds maturing in 2027, totaling $435 million. This early repayment will be facilitated by issuing new bonds with a lower coupon rate, thereby reducing the company’s overall borrowing costs.

We will use bond funds to repay the bonds due in 2027 – it is $ 435 million, which will be repaid prematurely from this issue with a lower coupon. The next part will be used to pay the remaining part of the purchase price of the new Brazilian acquisition, the Baixo IGUAC hydroelectric power plant.

Baixo Iguaçu Acquisition: A Key Investment

A significant portion of the newly secured funding will be allocated to finalize the purchase of the Baixo iguaçu hydroelectric power plant in Brazil. This acquisition represents a major strategic move for ENERGO-PRO, significantly boosting its renewable energy capacity in the region.The Baixo iguaçu plant, completed in 2019 and situated on the Iguaçu River in Paraná state, boasts a substantial total capacity of 350 megawatts [[[2]]. This acquisition underscores ENERGO-PRO’s dedication to expanding its renewable energy assets in key markets.

Renewable Energy Landscape in Brazil

Brazil is increasingly focused on renewable energy sources. Hydropower remains a cornerstone of the nation’s energy mix, accounting for a significant portion of its electricity generation.ENERGO-PRO’s investments align with Brazil’s broader strategy to diversify its energy sources and reduce its reliance on fossil fuels. The acquisition of the Baixo Iguaçu plant positions ENERGO-PRO as a major player in Brazil’s evolving renewable energy landscape.

Czech Firm to Become Major Player in South american Energy

In a move signaling a significant shift in the South American energy landscape, the Tesař Group is poised to acquire a Brazilian power plant with a substantial output of 350 megawatts. this acquisition, valued at over 250 million euros (6.2 billion crowns), will establish the Tesař Group as the largest Czech investor in south America, marking a pivotal moment in the company’s global expansion strategy.

Energo-Pro’s Notable Financial Performance

The acquisition comes on the heels of a strong financial year for Energo-Pro. Last year,the company reported sales of EUR 1.44 billion (approximately 35.9 billion crowns), reflecting a robust year-on-year increase of thirteen percent. Moreover, the company’s EBITDA profit indicator (profit before interest, taxes, and depreciation) surged by ten percent to 355 million euros (8.8 billion crowns), the highest figure recorded as the Tesař Group’s inception.

Strategic Implications and Market Impact

This strategic acquisition underscores the Tesař Group’s commitment to expanding its global footprint and diversifying its energy portfolio.The Brazilian power plant represents a significant asset, providing a stable source of revenue and contributing to the country’s energy infrastructure. As global demand for energy continues to rise, investments in renewable and traditional energy sources remain crucial. According to the International Energy Agency (IEA), global electricity demand is projected to increase by over 2% per year through 2040, highlighting the importance of strategic investments in power generation assets.

Looking Ahead: Tesař Group’s Future in South America

With this acquisition, the tesař Group is well-positioned to capitalize on the growing energy market in South America. The company’s expertise in energy production and management, combined with the Brazilian power plant’s capacity, creates a synergistic opportunity for growth and innovation. The move is expected to attract further investment and strengthen economic ties between the Czech Republic and Brazil.