The 95 megawatt hydroelectric plant will be built by Landsvirkjun, a state-owned energy company, which will use the finance to purchase components from Voith Hydro to be manufactured at its plants in Sweden and Germany. Voith Hydro is a joint venture of Voith and Siemens. SEB has existing relationships with both Voith and Landsvirkjun.
Christoph Tomas, head of SEB’s Project, Asset & Export Finance unit in Germany, explains the deal was complicated by the requirement to finance the purchase over 21 years at a fixed US dollar interest rate.
SEB brought the export credit agencies Euler Hermes (Germany) and EKN (Sweden) into the financing package - Euler Hermes to cover 95 percent of the export credit and EKN for reinsuring the Swedish supplies and proportional foreign supplies. Through the Swedish Export Credit Corporation (SEK) SEB was also able to provide the interest cover needed.
Tomas adds: "The complexity of this deal highlights SEB’s depth of experience, expertise and knowledge of the market. We are pleased to have found a solution for Landsvirkjun, which at the same supports our long-term client Voith.”
Transactions involving alternative energy supplies are an important part of SEB’s commitment to support activities that protect the environment.