HKCF places €599 million promissory note loans for the City of Düsseldorf

HKCF Corporate Finance GmbH (HKCF) successfully acted as the exclusive debt advisor to the State Capital Düsseldorf, placing a large-scale promissory note loan in the capital markets. The financing volume of €599 million ranks among the largest municipal funding transactions in recent years. With an achieved average interest rate of below 1.67%, the financing significantly outperformed original budget assumptions.

Transfer of Sewer Infrastructure by the City of Düsseldorf
The placement was initiated in the context of an in-house infrastructure transaction by the City of Düsseldorf. The city transferred sewer infrastructure assets — previously accounted for within its core budget—to a municipally owned utility enterprise. The assets mainly consist of wastewater pipelines, treatment plants, pumping stations, and various land parcels. These had previously been leased by the municipal wastewater utility from the city.

Financing structured on a fee-neutral basis
HKCF prepared a reliable valuation of the transferred assets within a very short timeframe and ensured that the asset transfer and its financing could be structured in a fee-neutral manner.
“The project timeline — from initiation to placement of external financing — was just about two and a half months. Completing all necessary approvals in this timeframe posed a particular challenge,” noted Martin Lawin, Founding Partner at HKCF.

Loans provided by insurers and banks
HKCF structured the promissory note loans in line with the depreciation periods of the transferred infrastructure assets. The resulting maturities ranged from 10 to 50 years, with amortizing repayment structures. The lender base was comprised primarily of insurance companies, with banks participating to a lesser extent. “There was exceptionally strong demand for the transaction, with the offering more than four times oversubscribed,” explained Dr. Frank Karbenn, Managing Partner at HKCF.