Porsche has issued the largest green Schuldschein to date with a volume of one billion euros. It is the first transaction of its kind by a car manufacturer.
13 Aug 2019 | 7305 Views | By Autocar Professional Bureau
Porsche issued its green Schuldschein for 1 billion euros (Rs 8,004 crore) in tranches offering maturities of five, seven and ten years as well as fixed and variable interest rates. The huge demand resulted in the original order book volume having to be increased. The funds raised from this transaction ...
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Porsche issued its green Schuldschein for 1 billion euros (Rs 8,004 crore) in tranches offering maturities of five, seven and ten years as well as fixed and variable interest rates. The huge demand resulted in the original order book volume having to be increased. The funds raised from this transaction will be exclusively used to finance the Porsche Taycan vehicle project. This sports car is the first fully electric vehicle by Porsche. This is said to be the first transaction of its kind by a car manufacturer and also claimed to be one of the largest to date.
Lutz Meschke, deputy chairman and member of the executive board for finance and IT at Porsche said, “We have succeeded in issuing the Schuldschein at extremely favourable terms in the current favourable capital market environment. This shows the high level of trust investors have in the long-term development of our brand and in Porsche as a company.”
According to BNP Paribas, Schuldschein is a traditional German floating- or fixed-rate debt instrument with a typical maturity of two to 10 years. A form of private placement, Schuldscheine are certificates of indebtedness relating to a loan. They are transferable but are not listed on exchanges, and because there is no legal requirement for a prospectus, issuance costs are low. It is an alternative way to raise funds instead of loans or bonds.
Wolfgang Ratheiser (pictured below), vice president corporate finance and treasury at Porsche said, "For Porsche, the Schuldschein market is an excellent liquidity pool. We have tapped into this market several times with great success. The Schuldschein offers different advantages such as lower costs, access to the debt market without being listed, the possibility to issue smaller tranches, easier documentation, and we target a different debt investor base which fits very well to our company."
Green push for Porsche Taycan
The Stuttgart-based sports car manufacturer is therefore continuing its innovative role in the electromobility and sustainability segment in its corporate financing structure. Porsche has identified a green project portfolio of more than 2.75 billion euros. Of this amount, approximately 55 per cent relates to costs for energy-efficient, resource-conserving production facilities and 45 per cent to development costs. At the time the Schuldschein was issued, the company had already reached the full allocation of funds in the context of the green project portfolio.
Porsche has subjected the sustainability of the green project portfolio and its suitability for green financing as part of the current Schuldschein to rigorous external audits - among others by the well-known rating agency ISS ESG and the Climate Bonds Initiative.
More than 100 institutional investors such as banks, pension funds and insurance companies have participated in the Schuldschein transaction. The huge demand from international investors that had not, in the past, participated in Schuldschein issues by Porsche was particularly encouraging. Primarily, these originated from the Asia region. The transaction was arranged by Landesbank Baden-Wurttemberg, Bayern LB and ING. In addition, ING provided support as a ‘green advisor’ – an expert in green Schuldschein transactions.
As part of its digitalisation strategy, Porsche has additionally participated in marketing via the ‘Debtvision’ third-party financing platform. Companies can market their Schuldschein on this platform efficiently and transparently, and reach a broad investor base.
Green fund for a green project
The fully electric Porsche Taycan forms the core of the green product portfolio that qualified for the financing through green financial instruments. Porsche claims that it meets all the requirements set out by the ‘Green Bond Principles’ of the International Capital Markets Association (ICMA) for the use of funds in the ‘Clean Transportation’ category. Therefore, not only is the result of the project – the combustion and emission-free sports car – categorised as sustainable, but also the development and design are characterised by sustainable and resource-conserving actions, as well as the construction of the modern plants.
Ratheiser further explained, "Porsche allocated the proceeds to finance and/or refinance a portfolio of eligible investments and expenditures (‘Eligible Green Projects’) in the eligible category Clean Transportation (‘Eligible Green Project Portfolio’). The 'Eligible Green Project Portfolio' consists of investments and expenditures in the past and future, which are exclusively associated with the development and production of battery electric vehicles (BEV)."
The 'Porsche Eligible Green Project' portfolio includes, but is not limited to, investments and expenditures in the following eligible projects:
• Expenditures in Research & Development (R&D) for the conception, development and construction of Battery Electric Vehicles (BEV)
• Investments in energy-efficient manufacturing production buildings and facilities (including infrastructures, production equipment and tools, supplier tools, processes and systems) solely built and used for Battery Electric Vehicles (BEV) development and production
The plant for the Taycan uses automated guided vehicle systems (AGVs), which unlike the traditional conveyor belt systems, reduces the height of the building. Thus, reducing any negative effect on the circulation of air.
The Porsche Taycan, which could probably launch by the end of the year, is already said to have more than 20,000 bookings.
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