SMBC Closes $915MM in Green Financing for Flood Diversion Construction Project

SMBC closed a $642 million green loan and acted as co-managing underwriter on $273 million of private activity bonds (green bonds) for the construction of the FM Area Diversion Project in the Fargo-Moorhead area in North Dakota and Minnesota, a public-private partnership (P3) with the United States Army Corps of Engineers.

More specifically, SMBC was a mandated lead arranger, hedge coordinator, deal contingent hedge provider, administrative agent and green loan coordinator on $642 million of senior secured credit facilities and acted as co-managing underwriter on $273 million of private activity bonds for Red River Valley Alliance, which will use proceeds from the transaction to finance the construction of a flood diversion channel and associated infrastructure that will help prevent future flooding events from impacting the Fargo-Moorhead area.

“We’re very excited to play an integral role in helping to finance this critical infrastructure project in this area of the country,” Adam Sherman, managing director and head of municipal and infrastructure finance for North America for SMBC, said. “The FM Area Diversion Project demonstrates SMBC’s ability to provide multiple solutions and services to clients, from lending and underwriting to hedge products and ESG coordination.”

“This transaction highlights SMBC’s commitment to financing sustainable projects and the role that public-private partnerships can play in building resilient infrastructure. SMBC’s infrastructure banking team has already developed a strong track record closing ESG financings, and the team stands ready to provide ESG solutions to our sponsor client base,” Raymond DiPrinzio, managing director and co-head of infrastructure finance and global structured finance for North America for SMBC, said.

Along with an international and local consortium of partners, including Acciona, Shikun & Binui and North American Construction Group, Red River Valley Alliance will design, build, finance, operate and maintain the project under a long-term project agreement.

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Terry Mulreany
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