Gunvor Group has successfully closed a new EUR 300 million financing, which consists of a syndicated, pan-European natural gas repo facility to cover multiple jurisdictions in Europe with a shared security package. It will be used to support Gunvor’s growing natural gas activity across Europe, where the company is already one of the largest physical natural gas traders.
The innovative financing allows Gunvor’s banking partners to participate in a natural gas financing structure with access to a robust security package based on a true sale transaction through a security trust and a segregated account to collect sales proceeds. This uniquely structured trade finance solution gives Gunvor the ability to secure, scale, and diversify access to competitive financing.
“Financing European natural gas trading is challenging for trading companies, given the inherently complex nature of its logistics, which consist of pipeline and storage capacities, as well as the regulatory environment, which operates across multiple jurisdictions. This results in a situation in which there is no common framework to tackle ownership rights or pledges over fungible goods. In working together with our banking partners, we have overcome these challenges to establish an innovative financing structure with competitive pricing,” said Tawfik Sadfi, Gunvor’s Head of Origination and Structured Trade Finance.
The facility was structured by Coöperatieve Rabobank U.A. (Rabobank) with its commodity trading subsidiary Brightfield Trading B.V. acting as “Grantor” and Gunvor acting as “Originator”. Rabobank will act as Coordinating Agent and Trustee of the facility, and Gunvor will act as a logistic agent. Rabobank also served as Bookrunner and Mandated Lead Arranger, as well as Coordinator and Security Agent. Mandated Lead Arrangers include CA Indosuez (Switzerland) SA, ING Bank N.V Amsterdam, Geneva branch and UBS Switzerland AG.
“Rabobank is delighted to have an excellent partnership with Gunvor which has resulted in an innovative working capital finance solution for its European natural gas activities that is flexible, scalable and cost competitive. Rabobank is committed to support its clients in the energy transition and has therefore developed a strong expertise in natural gas repo financing. In a difficult banking environment during 2020, the execution of this first ever syndicated commodity repo structure—a legal novelty supported by our lead counsel Norton Rose Fulbright LLP—is an outstanding achievement and something to be very proud of for all parties that contributed to this success,” said Peter Zonneveld, Rabobank’s Global Head of Structured Inventory Products.
Gunvor is a leading participant in European and U.S. physical natural gas markets, performing wholesale trading with utilities and industrial customers. To support activities, Gunvor maintains a portfolio of investments—as well as medium- to long-term contracts and partnerships—in strategic assets, including in transportation, pipelines, storage, and regasification. Gunvor’s global market reach and advanced analytics enable the company to develop specialized transactions for customers, supported by top-tier risk management and trade finance services. Gunvor’s team also draws on the expertise of the company’s liquefied natural gas (LNG) team, the largest independent LNG trader worldwide, and is presently developing power trading to further complement operations.