AGEFI Luxembourg - mars 2024

AGEFI Luxembourg 36 Mars 2024 Fonds d’investissement By Paul PÉPORTÉ, Partner, International Capital MarketsandRuslanaHRISCHEVA,SeniorAssociate, International CapitalMarkets,Allen&Overy R egulation (EU) 2023/2631 (the Eu- ropeanGreen Bond Regulation) entered into force on 20 Decem- ber 2023 and themajority of its provi- sions will apply from21 December 2024. It introduces the EuropeanGreen Bond Standard or EuGB – a voluntary gold label for the issuance of green bonds in Europe which forms part of the European Commission’s Green deal initiatives. The global green bondmarket has seen exponen- tial growth since its creation in2007, reachinga total of more than 4 trillion US dollars of outstanding green, social and sustainability linkedbonds in2024 according to Environmental Finance Data. (1) How- ever, it continues to face challenges such as risks of greenwashing, lack of common definitions and standards forwhat constitutes environmentally sus- tainable economic activities and diverging rules on disclosure and reporting practices. Toaddress these challenges andenhance credibility, the European Green Bond Regulation foresees a number of stringent obligations for issuers making use of the EuGB label. The most substantial obliga- tion is that an issuer must allocate the bond’s pro- ceeds tofinance activitieswhichare alignedwith the EU Taxonomy. (2) An EuGB issuer will also need to provide pre- and post-issuance disclosures in re- spect of the environmental contribution and EU Taxonomy alignment of the bond issuance which will be subject to review by an official external re- viewer to be registeredwith ESMA. Finally, the EuGB issuer will be subject to the over- sight of the competent authority of its home Mem- ber State under the EUProspectus Regulation ( PR ) in respect of compliance with its obligations under the European Green Bond Regulation. The label is only available to issuers having a PR compliant prospectus or beinganexempt EUSovereign issuer, and the prospectus will need to specifically desig- nate thebonds asEuGBand theuseof proceeds sec- tionwill need to include a statement that the bonds are issued in accordance with the European Green Bond Regulation. Howwill thenewlabel interactwithexistingmarket practices and standards, such as the International Capital Market Association ( ICMA ) Green Bond Principles?What are the advantages andchallenges of using the EuGB label for issuers and investors? And how does the standard support the transition to a climate-neutral economy? Thesewere someof thequestionsdiscussedat afire- side chat on theEuropeanGreenBondStandard, or- ganisedbyAllen&Overyduring its annual Capital Markets Forum held on 1 February 2024. The pan- elists, Ms Christine Mai, from the European Com- mission’s DG FISMA, and Mr Özgür Altun, from ICMA’s Sustainable Finance team, gave us more flavour on how they foresee the use of the EuGB. Here is an overviewof the discussions. The panelists agreed that the EuGB label is fully compatible with the existing market standard ICMAGreenBondPrinciples andbuilds on its best practices which will likely result in an automatic alignment of an EuGB bond with the ICMA Prin- ciples. For this reason and given its voluntary na- ture, the EuGB allows issuers willing to commit to anEUTaxonomy alignment to go beyond themar- ket standard and offer increased transparency to investors. The panelists highlighted that the EuGB label is meant to increase and not to fragment the overall ambition and credibility of the green bondmarket as a result. However, the panelists also discussed usability issueswith the EUTaxonomy. For ICMA, the uptake of the EuGB will depend primarily on the resolution of usability issues, echoing feedback from the funds industry and relating primarily to the assessment of the Do No Significant Harm (DNSH) and Minimum Safeguards (MS) require- ments including: (i) widespread data unavailabil- ity; (ii) lack of a commonmethodol- ogy that would allow the use of estimates/proxies to fill the data gaps where they exist; (iii) the interpretable/ subjective na- ture of some technical screening criteria; and (iv) heavy reliance onEU leg- islation and criteria which hinders the assess- ment of non-EU located projects. Another industry con- cern is that by not recognising transi- tional activities which do not perform at aspi- rational levels, the EU Taxonomy and EuGB re- main inaccessible to issuers from carbon heavy industries, the transition of which should be its ultimate measure for success. An issuer of an EuGBdoes have some flexibility to allocate up to 15% of the bond’s proceeds to fi- nance activitieswhich are alignedwith the EUTax- onomy butwhichdo not complywith the technical screening criteria (where there are no such techni- cal screening criteria in force on the issue date). If capital expenditures or operating expenditures will meet the EU Taxonomy requirements in the future, an issuer will also need to publish a CapEx plan specifying a deadline by when all expendi- tures funded by the EuGB shall be EU Taxonomy aligned (which must be before maturity). CapEx plan provisions have generated both positive and negative industry feedback. For example, a summary of the CapEx plan will need to be included in the prospectus, bringing with it potential PR prospectus liability where on the positive side the European Green Bond Regu- lation does not seek to impose penalties on issuers as it embraces uncertainty on meeting targets or falling behind, but rather asks them to justify why their CapEx plans have not been implemented as expected or on time. This is to be put into perspective in the context of an EU Taxonomy which is still in its very early years of application and reporting and the myriad of guidance and initiatives by the EUCommission which tend to signal that usability issues are a shared priority between the market and policy makers. ICMA’s recommendations to the Euro- pean Commission in the context of the SFDR con- sultation are an example. The ongoing call for feedback on the EU Taxonomy-aligning bench- marks report are another. The European Green Bond Regulation also pro- vides an alternative, optional regime of pre- and post-issuance disclosures for bonds marketed as environmentally sustainable and sustainability- linkedbondswhich allow issuerswhich are not yet able to comply with the strict requirements of the EuGB to demonstrate their ambition and con- tribute to the transition. The European Commis- sion is in the process of developing voluntary templates for pre- and post-issuance disclosures for bonds marketed as environmentally sustain- able and sustainability-linked bondswhichwill be published by December 2024. Although these templates remain voluntary under the European Green Bond Regulation, questions have been raised by the legal community on whether these will ultimately become mandatory under the PRvia the proposed amendments to the PR under the Listing Act package. These suggest amendments to the delegated act powers in the PR to allow the EUCommission to adopt a disclosure annex to be followed for prospectuses prepared in relation to ESG securities. The extent to which it might follow the content of the voluntary tem- plates developedunder the EuropeanGreen Bond Regulation is not yet known. Conclusion The European Green Bond Regulation presents challenges but also opportunities for the climate- neutral transitionwhich requires amassivemobili- sationof capital toachieve thegreendeal’s objectives by 2050. In terms of opportunities, it offers integrity and clear expectations to investors with the align- ment to theEUTaxonomyandcanbe of aparticular interest to investorswhoneed to report on their Tax- onomy aligned holdings. It also reduces potential discrepancies between different green bonds in terms of range of ambitions and the divergence be- tweenmethodologies among reviewers. On the other hand, its use by non-purely green or institutional issuers or to finance transitional activ- ities is hindered by usability issues of the EU Tax- onomy. It also imposes very stringent disclosure and reporting requirements and potentially in- creases prospectus liability without a concrete fi- nancial incentive for the issuers so far. Delegated and implementing acts and the continuous evolu- tion of the EU Taxonomy will be key factors for its success. One could fear that any ambitious reform anddevelopment in sustainable finance legislation might face resistance and will be less of a priority if Eurosceptic and populist parties win this year’s European elections. 1) https://efdata.org/ 2) Regulation (EU) 2020/852. European Green Bond Regulation: a game changer or a missed opportunity? Par Olivier KEN, Co-Gestionnaire QCFL Accessible Clean Energy, Quaero Capital Les débuts en bourse L ’histoire des développeurs d’énergies renouvelables en bourse est assez récente. Elle commence en 2006 avec la cota- tion d’EDF Energies Nouvelles, fi- liale d’EDF. L’année suivante, l’espagnol Iberdrola vend 20%de sa filiale sur le marché, Iberdrola Renovables, leader mondial de l’éolien terrestre, réalisant la plus grande introduction boursière ja- mais réalisée en Espagne. En 2008, c’est au tour du groupe portu- gais EDP Renováveis, la filiale spéciali- sée dans l'énergie renouvelable, de faire son entrée en bourse. L’opération est un succès et permet à EDP de lever plus d’1,5milliards d’euros etmarque la plus importante opération boursière réalisée en Europe depuis le début de l'année. EDP Renováveis est alors l'un des pre- miers groupe d'exploitation de l'énergie éolienne avec une puissance éolienne installée de 3,7 GW. Les investisseurs découvrent ce nou- veau businessmodel qui est celui de so- ciétés d’infrastructure : construire des centrales d’énergies renouvelables, pro- duire de l’énergie et la vendre via des contrats de long terme, le plus souvent à prix fixe indexé sur l’inflation. A cette époque, les énergies renouvelables ne sont pas compétitives avec les énergies fossiles et ont besoin de subventions. La croissance de l’éolien terrestre fascine les investisseurs et les multiples de valori- sation s’envolent (PE de 110x pour Iber- drola Renovables). La crise financière En 2008, LehmanBrothers fait faillite. La dette souveraine est en crise en Europe, les valorisations s’effondrent, passant même endessous de la valeur des actifs. Rétrospectivement, une opportunité d’investissement extraordinaire ! Les maisons mères ne s’y trompent pas, EDF, puis Iberdrola rachètent les parts minoritaires de leurs filiales en 2011. Seule EDPR reste cotée alors que ses ac- tionnaires rejettent l’offre jugée sous- évaluée. Malgré ces offres de retrait, le secteur perd de son attrait, comme l’at- teste l’introduction en bourse de Enel GreenPower (2010). Le prix d’introduc- tion est baissé à 1,6 euro, contre une fourchette initiale de 1,9-2,4 euros, soit un multiple VE/Ebitda de 8x, loin des multiples des années 2006-2008. L’euphorie En2020, laCommissioneuropéennepré- sente son Green Deal, qui vise 0 émis- sions en 2050, objectif qui implique une multiplicationpar 5des capacités d’éner- gies renouvelables – lesquelles sont deve- nues compétitives par rapport aux éner- gies fossiles en 2019. Le secteur flambe à nouveau, l’indice phare du secteur, le Wilderhill Index s’envole de +120%. Le 24 février 2022, la Russie, alors pre- mier fournisseur de gaz des Européens, envahit l’Ukraine. Le prix du gaz est multiplié par 10. La Commission euro- péenne annonce le planRepowerEUvi- sant à réduire sa dépendance au gaz russe en important du gaz naturel et tri- plant ses capacités d’énergies renouve- lables. De nécessaire, la transition énergétique devient stratégique.Malgré ce soutien réglementaire sans précédent, le secteur est en baisse depuis 2 ans. Pourquoi ? La raison principale est liée à la hausse des tauxd’intérêt auxÉtats-Unis qui ren- chérit le coût du capital d’un secteur très capitalistique et endetté. La seconde rai- son vient de la volatilité des prix du gaz qui, après avoir flambé, sont retombés au niveau pré-invasion de l’Ukraine suite à unhiver 2022 doux et des capaci- tés de stockage au plus haut. Enfin, le secteur a été fortement affecté par un avertissement sur les résultats de Orsted, leadermondial de l’offshore. Le géant danois annonce stopper le déve- loppement de 2 projets aux États-Unis, devenus non économiques, et passe des dépréciations pour 4Mds$. La hausse des taux d’intérêt et donc du coût du capital est gérable pour les grands acteurs car elle s’accompagne d’un doublement du prix de l’électri- cité depuis 2 ans, ce qui leur permet de continuer à créer de la valeur. En effet, l’écart entre le taux de retour sur inves- tissement (TRI) et leur coût du capital (WACC) se situe aujourd’hui entre 200 et 300pb. La volatilité du prix du gaz impacte peu le compte de résultats des sociétés qui vendent majoritairement leur éner- gie à prix fixe indexé sur l’inflation sur 10, 15 voire 20 ans. L’avertissement d’Orsted ne doit pas être généralisé à l’ensemble du secteur. L’éolien offshore est la technologie la plus capitalistique avec des temps d’ins- tallation allant jusqu’à 10 ans. Face à la compétitiongrandissante des pétroliers, Orsted a accepté des projets à des prix de ventes d’énergie agressifs sans sécu- riser son approvisionnement. Ils sont aujourd’hui victimes de l’inflation sans pouvoir bénéficier de la hausse des prix de l’énergie. L’histoire se répète ? La valorisation des développeurs ne re- flète plus leur potentiel de croissance, voire la valeur de leurs actifs. C’est une opportunité. Les opérations de rachat de sociétés cotées par des fonds d’infra- structure se multiplient : ERG par le fonds australien IFM en 2022 et l’espa- gnol Opdenergy par le fonds français Antin Infrastructure Partners en 2023. www.quaerocapital.com Histoire des développeurs en bourse

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