How I Underwrote a $52M Hydro Refinance in Brazil

I underwrote a $52M hydro refinance in Brazil.

The plants are finished, but there's FX risk...

- $52M raise, two operating hydro plants
- 39MW combined capacity, both fully built
- 20-year power contracts, already signed
- $30.9M projected 5-year EBITDA
- 29% loan-to-value

This is a refinance, not a build. Both plants are live and selling power under long-term contracts. The owner wants to swap expensive Brazilian bank debt for cheaper, longer-term capital.

To fund deals like this, I ask 4 questions:

1) What stage of risk are we in?

- Zero construction risk
- Refi on a finished asset
- Both plants operating 1-2 years

2) What makes the location work?

- Brazil's grid is majority hydro
- Contracts run 20+ years
- Hydro doesn't go obsolete

3) How is the downside protected?

- The plants as collateral
- Contracted revenue assigned
- Shares are also pledged
- The $180M valuation is unconfirmed
- There is no FX hedge disclosed

4) Can we control the exit?

- Exit is cash flow, not a sale
- Contracts outlast the loan
- No refi-of-the-refi plan yet

Revenue's 100% reais, debt's in dollars, and over 20 years that gap alone could hurt repayment even if the plants run perfectly.

My verdict:

- Strong fit for Private Credit
- Strong fit for Family Offices
- Medium fit for Institutions

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