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    INVESTMENT BANKING | CLIENT STORY

    Powering Portland General Electric’s future with innovative green financing

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    Barclays partners with Portland General Electric to develop a new Green Use of Proceeds equity financing alternative that advances its business and sustainability goals.

    Powering Portland General Electric’s future with innovative green financing
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    In October 2022, Portland General Electric (PGE) issued 11.615 million shares of common stock in a first-of-its-kind Green Use of Proceeds equity offering.

    PGE is a fully integrated electric utility whose service area includes the Portland metro area and nearly half of the population of Oregon. In 2021, PGE became the first utility in the United States to join The Climate Pledge, which aims for net zero carbon emissions by 2040. The company has been actively pursuing renewable energy through its own development and acquisitions to meet its sustainability goals.*

    Just in the past two years, for example, PGE has made significant investments in wind, solar and hydro power in its effort to decarbonise its energy supply. In 2021, Barclays led PGE’s $150 million inaugural green bond to finance the acquisition and development of a 380 megawatt wind, solar and battery storage facility in eastern Oregon.

    Recently, PGE sought a new way to finance its operations without going back to the debt capital markets. But they couldn’t find an existing equity product that aligned well with their current needs, company values and strategic direction.

    We wanted to do this deal in a way that fits our green mission, so we asked our investment banking partners to come to us with ideas on how to structure equity that served our needs. Barclays came to us with possibilities for how to do it.
    Chris Liddle, Senior Director Controller and Assistant Treasurer, Portland General Electric

    Bringing together experts from its Power & Utilities, Equity Capital Markets and Sustainable Capital Markets teams, Barclays structured a Green Use of Proceeds equity offering for PGE. The proceeds of this offering are being designated to construct a 311 MW wind energy facility, which will be part of the larger Clearwater Wind development in Eastern Montana, as well as additional renewable and battery storage projects.

    This unique structure is different than other capital markets products proposed or in use today. Green bonds, which are the prevalent financial product utilised when public companies raise capital to support their sustainability goals, are a debt instrument that affects a company’s credit profile, and so may not be financially prudent in all situations. Sustainability-linked revolving credit facilities, which PGE has also utilised, link sustainability targets to benefits in pricing for liquidity, but are not a source of permanent capital. To date, proposed “green” equity structures would create a new class of shares rather than allow investors to purchase new common shares, restricting viability in many cases. The Barclays-designed Green Use of Proceeds equity offering gives investors publicly tradable common shares, whose proceeds are earmarked for investment toward its decarbonisation goals.

    Visual depicting PGE's range of green financing: green bonds, sustainability-linked revolving credit facility and Green Use of Proceeds equity offering

    Investor reaction was strong for the nearly $500 million offering, which was multiple times oversubscribed and priced at a tight discount relative to the size of the deal. 

    PGE is on the leading edge of the energy transition, and we are proud to support them as they work to create a safe, reliable, clean energy future.
    John Lembeck, Director, Equity Capital Markets, Barclays

     

    Trust powers innovation

    It was trust and the long-term relationship between PGE and Barclays that drove the success of this new approach to green financing.

    “The team at Barclays understands our business well and have worked with us to align our financing to our sustainability mission,” said PGE’s Liddle.

    *Note: View Portland General Electric climate goals at https://portlandgeneral.com/about/who-we-are/climate-goals

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    Disclaimer

    Any transactions referred to in this document labelled as “green”, “social”, “sustainable” or equivalent were labelled as such at the point of issuance/origination (or equivalent) of the relevant transaction. Please note such labelling is distinct from the reporting eligibility criteria of Barclays’ own sustainable finance /transition finance frameworks. Such transactions are referenced here merely as examples of the types of transactions in which we have been able to assist our clients. By including them in this document we are not making any current claims about their sustainability related characteristics.

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