Leapfrog Finance go from strength to strength

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We are incredibly proud of our long-standing partnership with Leapfrog. We have provided pro bono advice to the Charity arm of Leapfrog (now Pure Leapfrog) for over 10+ years.  In 2015, shortly after setting up Lux Nova, we advised on the initial structuring (including state aid compliance) setting up and securing £15 million investment from Big Society Capital for a commercially operated finance arm (Leapfrog Finance) to the existing charity division.

This addition was needed in order to address a market failure, namely lack of affordable debt capital available to social and community enterprises to develop their own utility-scale renewable energy assets. The bridge fund remains the only source of debt capital available to fund 100% of the project development/construction cost or acquisition cost (if already constructed), providing a breathing space and assistance to the community organisation to then raise long-term debt capital and secure equity funding through undertaking a community share or bond offer.

Leapfrog has deployed approximately £40 million loan commitments (including co-funding commitments from a community-oriented energy supply company secured in 2018, which we advised on). The fund supports a range of technologies from ground mounted solar & rooftop in conjunction with battery to heat and energy efficiency that will create long-term social and environmental benefits for local communities, with a specific focus on targeting communities in areas of highest deprivation.

Since setting up the fund, we have acted for Leapfrog on the deployment of all of their loans (including providing due diligence, structuring advice and preparing and negotiating loan and security documentation) covering various construction, acquisition and bridge loans, and underwriting of share offers. To date, this includes an aggregate of 117MW of community- and publicly owned renewable energy projects, and where the initial bridge term is complete the majority of the loans have been refinanced with long-term debt from commercial banks (we have acted for Leapfrog on all of these refinancings).

As a most recent example of our work with Leapfrog, we advised them on their £11 million mezzanine revolving construction bridge funding to GRIDSERVE, as developer, undertaking the UK’s largest subsidy-free integrated solar and battery farm developments (circa 60.4MW solar, 27MW battery storage) across two sites in the North of England. Once commissioned the two parks will be acquired by Warrington Borough Council, which will make Warrington the first local authority to produce all of its own electricity from clean sources. Leapfrog funded these projects alongside Investec Bank (as senior lender in a common bridge financing structure), playing an active role (with our support) in the structuring of both the contractual and acquisition documentation as well as the financing documentation (including intercreditor arrangements). The panels and tracking system are a new design for the UK. The projects are expected to generate over £2.25 million of community benefit over their life.

It has been incredibly satisfying to drive such a critical element of the community solar market, making projects happen that otherwise may not have materialised. We are already focussed on further and even bolder innovation, together with the Leapfrog team – watch this space!

The knowledge and professionalism that Louisa brought to the deal was second-to-none, addressing project financing risks, the complexities of a commercial & local authority transaction and enabling Leapfrog to secure £2.25m in community benefit funds to help local people in the Warrington area. We are enormously proud to partner with Lux Nova.
— Claire Hanratty, CEO, Leapfrog

Further reading here.