Bank of China (Hong Kong) contributes a €400 million EUR syndicated bridge loan to Shanghai Electric to finance its acquisition of a 40% equity stake in Ansaldo Energia S.p.A.

Project narrative

Around August 2014, a syndicate of 10 banks — including the Bank of China (Hong Kong) Limited (BOCHK) as arranger — entered into a €400,000,000 EUR ($534 million USD) syndicated bridge term loan facility agreement with Shanghai Electric Newage Company Limited — a Hong Kong-incorporated wholly-owned subsidiary of Chinese multinational state-owned power generation and electrical equipment manufacturing company Shanghai Electric Group Company Limited — to finance its acquisition of a 40% equity stake in Ansaldo Energia S.p.A. The loan carried a maturity period of one year and a variable interest rate. Shanghai Electric Group provided guarantees for this loan. In addition to BOCHK, the following lenders contributed to the loan syndicate: Deutsche Bank AG, JPMorgan Chase Bank, N.A., Barclays Bank Plc, Citigroup, HSBC, Royal Bank of Scotland (RBS). Ansaldo Energia S.p.A. (AEN) was an Italian power generation and engineering equipment maker that manufactures power plants (especially thermoelectric and hydroelectric) and steam and gas turbines. It also conducted work related to nuclear energy and maintenance and service for power plants. It was headquartered in Genoa, Italy. On May 8, 2014, in a ceremony attended by Italian Prime Minister Matteo Renzi, Shanghai Electric Group entered into a share transfer agreement with Italian state-backed private equity fund Fondo Strategico Italiano S.p.A. (FSI) to acquire 40% of shares in Ansaldo Energia for a consideration of €400 million EUR ($555 million USD). The acquisition was expected to give Ansaldo further sales via the Asian market and would provide Shanghai Electric with Ansaldo's technology, including gas turbine technology China did not possibly have. Under the share transfer agreement, Ansaldo Energia and Shanghai Electric would set up two joint ventures in China to produce gas turbines for Asia and a research and development center in Shanghai. The deal was called the largest Italian-Chinese deal to that point. The acquisition was completed on December 4, 2014. On May 22, 2015, Shanghai Electric Newage issued €600 million EUR in bonds and used the proceeds to pay off the €400 million EUR bridge loan.