Canadian specialized financial services company Stonebridge Financial Corporation has made an indelible mark in the financing sector, facilitating many important infrastructure projects around the country, and earning a reputation for expertise in structuring, syndicating and closing project financing transactions in the institutional market over the last 15 years.
Stonebridge was founded by Robert Colliver and Denis Bourassa in 1998 with the support of three major Canadian life insurance companies, with a view to establishing a reliable origination source of high quality private debt investment opportunities. Today, those institutions remain as minority preferred shareholders of Stonebridge and continue to be key loan syndication relationships. Stonebridge has also branched out its services and syndication of its transactions to a broader group of investors, including banks and pension funds, and more recently its own managed private debt fund. Stonebridge offers a suite of financial services tailored to the diverse needs of each client. These services include project financing, loan administration, debt fund management, and bulk lease financing.
Stonebridge operates predominately in three major sectors: renewable energy, healthcare, and general infrastructure. Transactions in this space typically rely on long-term revenue contracts with government entities or utilities to facilitate a highly levered and custom tailored debt financing for the project. The project debt, which includes construction and long-term financing, is repaid over the term of the project life, and is generally non-recourse to the project sponsors. In other words, repayment of the project loan relies solely on the project asset and economics.
According to Cam Di Giorgio, Vice President of Project Financing, Stonebridge has originated over $2.7 billion of debt financing since its inception, primarily representing long-term, fixed interest rate debt financings for various projects, including municipal buildings, schools, long-term care facilities, courthouses and various renewable energy projects such as hydro facilities, and wind and solar farms.
“Regardless of the type of financing, Stonebridge offers solutions that provide clients with an alternative to conventional lending methods, competitive rates and maximum financial leverage,” says Bourassa.
In addition to originating, structuring and syndicating financing transactions, Stonebridge augments and supports this business with its loan administration service and infrastructure debt fund management.” says Bourassa.
Infrastructure Debt Fund
In April 2012, Stonebridge raised over $200 million of capital from various Canadian pension funds and institutional investors to establish Stonebridge Infrastructure Debt Fund I L.P. (“Fund I”), with the support of PPP Canada Inc. Fund I is a closed-end fund managed by Stonebridge with the investment objective of making long-term, fixed rate, senior construction and take-out loans in connection with social infrastructure and energy projects. “In a little over one year, we have fully committed the fund’s capital to various transactions made available to us, including Stonebridge originated transactions, and are over 95 per cent invested,” says Louis Bélanger, Managing Director, Stonebridge Infrastructure Debt Fund.
Based on the success of the Fund I, Stonebridge has launched Stonebridge Infrastructure Debt Fund II LP. (“Fund II”), which will be an open-end fund with similar investment objectives as Fund I, providing institutional investors with long-term, reasonably predictable cash flows and premium returns over comparable public bond yields. Fund II is scheduled to close on February 28th, 2014, with Stonebridge expecting to raise up to $500 million in capital commitments over the next 24 months.
Bulk Lease Financing
In 2001, Stonebridge expanded its activities to include a short term investment vehicle in the form of a lease financing operation. That group has done in excess of $1.5 billion of financing and this year the leasing operation became a separate entity and is now an affiliated company of Stonebridge. Designed similar to securitization, but without a formal trust, Stonebridge provides financing to leasing companies who wish to borrow against the future cash flow of their funded lease portfolios.
John Estey, President, Stonebridge Lease Financing Corporation states, “We use financial institutional money (typically life insurance companies) to finance bulk leasing facilities for independent leasing companies. Our structured product provides leasing companies with facilities ranging from $10 to $100 million or more at an attractive rate. We act as an administrative agent and marketing arm for our life insurance company partners.”
A typical customer looking for bulk lease financing would be in the commercial space. Says Estey, “Why do customers come to us? They come to us and our program because they can leverage off their balance sheet at a very good rate, and get access to a diversified pool of capital. Our clients maintain a direct relationship with their lessees, including collecting lease payments, negotiations, and pricing while optimizing their corporate cash flow by locking in lease profits at the time of funding.”
To round out its financial services Stonebridge offers a host of administrative services designed to provide investors and clients with a convenient and effective means for managing their financial relationships. With an offering ranging from loan administrative services, construction monitoring services, client trust services, including payment, security and escrow agent services, Stonebridge has the solution.
According to Darrell Salter, Senior Vice President, Corporate & Portfolio Administration, “At Stonebridge we offer a “one stop” shop approach to loan management, that streamlines and simplifies the loan process for both investors and clients. With $1.5 billion currently under administration, the benefits of our administration services to our stakeholders speaks for itself,“ says Salter.
“Integrity, trust, and innovation are the cornerstone of the Stonebridge philosophy so having a seasoned group of financial professionals with the depth and breadth of knowledge like we have is key to delivering high quality, well-structured financial solutions and exceptional service to the market.”