SVB: Under new ownership
This week, First Citizens Bank agreed to a whole bank purchase of Silicon Valley Bank, taking on all its loans and certain other assets, as well as assuming all its customer deposits and certain other liabilities. In all, First Citizens is taking assets of $110 billion, deposits of $56 billion and loans of $72 billion.
The move has largely been welcomed by the power sector’s project finance community, notably those in smaller renewable projects. Silicon Valley Bank developed a specialty for community solar, and claimed it was leading or participating in 62% of financing in US developments in that field. In total, it had more than 1,550 customers in the broader climate technology and sustainability sector, and it committed $3.2 billion to innovation projects.
Yet despite the upheaval of SVB, and Signature Bank going into FDIC receivership, the waters seemed to remain calm at the smaller end of the renewables spectrum. The biggest fear concerned undrawn lines of credit, but legal sources told PFR that the FDIC was following through on its promise, and that those with capacity in their lines of credit will be able to call on those funds. And business will continue as normal with the 17 legacy Silicon Valley Bridge Bank branches now operating as Silicon Valley Bank — a division of First Citizens Bank.
At the moment, what can’t be answered definitively is whether First Citizens will have the same appetite to carry out lending on new opportunities.
Frank Holding Jr., chairman and CEO of First Citizens, pointed to the synergies between the two banks’ private wealth books and SVB’s private equity and venture capital clients as the biggest draws of the deal.
"This transaction leverages our solid foundation to add significant scale, geographic diversity, compelling digital capabilities and most importantly, meaningful solutions for customers throughout their lifecycle. Specifically, we are committed to building on and preserving the strong relationships that legacy SVB's Global Fund Banking business has with private equity and venture capital firms. This transaction also will accelerate our expansion in California and introduce wealth capabilities in the Northeast. SVB's Private Wealth business is a natural fit for our high-touch and sophisticated level of high-net-worth customer service and approach," he said.
As such, many expect funding for new project finance obligations may be put on the back burner, especially given SVB’s specialty of smaller renewables projects, which remain challenging to finance. Developers continue to face pressures from rising interest rates, as well as higher inflation affecting material costs.
But there are already signs that other lenders are willing to explore lending to developers with smaller renewables projects, albeit with significant pipelines.
Scale Microgrids closed a first-of-its-kind $225 million non-recourse project finance debt facility to fund the construction and operations of a portfolio of microgrids, combined heat and power (CHP) systems, community solar, rooftop solar, battery energy storage systems and microgrid electric vehicle infrastructure projects.
KeyBanc Capital Markets acted as joint lead arranger and structuring administrative agent on the loan. City National Bank also contributed as joint lead arranger, and Energetic Insurance provided a credit insurance policy enabling access to the bank lending market.
Likewise, Oya Renewables, the clean energy developer and independent power producer, has closed a $27.1 million long-term loan facility for community solar from City National Bank (CNB) and tax equity funding from Greenprint.
While community solar developer ClearPath also closed an innovative facility with a direct lending infrastructure fund managed by Brookfield Asset Management. The investment will initially focus on funding ClearPath’s operating and construction-stage assets in the US. ClearPath’s mission is to advance the adoption of renewable energy by providing an abundance of clean energy solutions that serve communities and businesses across the US.