GlobalCapital: Hi Gregor. First of all, can you give an introduction and a bit of background on what Enpal does and where the company has come from?
Gregor Burkart: Absolutely. We started back in 2017. The vision was to make renewable energy more accessible for everyone. We interpreted that in two ways: being more digital and more affordable.
Previously, access to solar and heating was quite technical, it was entirely offline-based and decentralized. So we came up with a solution that's entirely digital. We have created a seamless, customer friendly user journey from sale to grid connection.
Solar systems or heat pumps are expensive, and not many households have the necessary capital available. So we came up with the idea of offering a payment in monthly instalments through a fully integrated captive financing solution.
We then grew quite rapidly. We are now the largest residential solar player in Europe, with more than 90,000 customers in our portfolio and revenues of more than €900 million in 2023.
GC: Let's talk a bit about the capital markets side of the equation here. Was your vision always that this would end up in some sort of public ABS vehicle?
GB: When I joined Enpal in 2019, I pitched the idea of a solar ABS to the founders – but I would have never thought we would come such a long way that quickly. The initial idea was to develop a captive financing solution for the business, but Enpal didn't have sufficient scale to go through a securitization. We went for project finance as a means of refinancing, which allowed us to scale up the first €5m portfolio in a couple of months.
Ultimately, we introduced securitization in 2022 when we set up our first private warehouse with Citi, which also won a GlobalCapital award - as private securitization of the year. Now we are originating €80m to €85m a month, which allows us to fill these structures quite efficiently and do public takeouts.
GC: So, what were some of the challenges you encountered on the way to getting to this point and doing a public deal?
GB: There's a couple of challenges. The first challenge was size - we needed sufficient volume to get into the securitization market.
Another challenge was installation quality. We had to make sure we had a tight grip on quality measurement and control while scaling, which we did, again, through digitalization. We monitor our installers in real time while they're on site via tablet. We can connect with them and make sure everything is done right.
The other pillar was data. We needed to demonstrate to the rating agencies a performance track record. In summer 2024 we had five years of performance data in our portfolio, which allowed us to obtain a ‘Simple, Transparent and Standardised’ status for our public ABS.
GC: How did the deal go overall? Were you satisfied with the level of engagement from investors? Did they welcome the work you've done?
GB: Yes, definitely. When we came up with the structuring, we carried a lot of responsibility. Do you position a solar ABS closer to an RMBS, in terms of tranching and structuring or do you position it closer to a consumer loan ABS?
Then once we had the tranching right, we had to get the pricing right. There was no benchmark whatsoever, so we had to work with proxy data.
When we went to market, there was a lot of interaction with investors, but there were zero pricing indications. We had to come up with the first pricing whispers, which we deliberately set quite wide. With the US election coming up, we were also quite tight on timing to close the deal. That allowed us only 10 days in the market.
Once we had the guidance out there, the bids started streaming in. We tightened twice, and potentially could have tightened three times, if time had allowed. We ended up with quite a good result. The seniors were at 85bp over one-month Euribor.
GC: It sounds like the plan from here is to be a regular issuer in the ABS market. What are your other plans to grow the business now?
GB: The plan is to become a regular issuer. If you look at our business, what naturally will follow is a diversification of the underlying assets.
In future deals we'll likely see heat pump loans as well. We are now the market leader in Germany on heat pumps. Last year, we installed about 4,500 heat pumps.
The international expansion is another area.
My real hope would be that we don't remain the only issuer. I hope others follow our example and approach public markets with their assets.
GC: Do you think your work will make it easier for others to follow in your footsteps?
GB: I strongly believe so. The structuring work that we did around tranching, around legal tenures, around first optional redemption dates and on pricing should make it easier now. Also, our performance history should give investors confidence that other business models will be able to perform similarly.
GC: Thanks Gregor. It certainly seems like the sun is shining on the sector at the moment.