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German mezzanine finance company set up
1 January 2005
Abo Wind of Wiesbaden, Germany, has founded an independent mezzanine finance company to administer EUR 2 million raised from investors for a five year period that will be used to facilitate wind project financing. Abo Wind Mezzanine will provide loans that partly substitute for equity for up to around one year for wind projects that are ready to build. The loans are secondary to credits from the financing bank, but have priority over the equity bank. Abo Wind not only guarantees investors annual interest of 8%, but also pledges that the mezzanine company can invest its funds at any time at fixed conditions. Further, 80% of the post-tax profit of the mezzanine company will be distributed to investors. "In the past most wind projects were sold before they were built, but these days, international investors, in particular, buy projects after commissioning. During the sale there are also long due diligence investigations and generally longer development periods are required for foreign projects," says Abo Wind, explaining its reasoning behind the fund. The company has so far sponsored 112 wind turbines with a total capacity of 150 MW.
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