ESB Financing Strategy
ESB is 95% owned by the Government of Ireland. The remaining 5% is owned by ESB staff through an Employee Shareholder Ownership Trust. Since its inception in 1927 ESB has received no equity funding from its shareholders and has financed its activities through a combination of cash generated from operating activities and debt funding.
ESB Funding Strategy – Key Principles
ESB’s financing strategy focuses on ensuring that flexible and cost-efficient financial resources are available to the ESB Group to support continuing growth and investment in line with the overall business strategy.
The long term nature of the ESB Group’s assets results in the organisation seeking long term funding, subject to cost and market conditions. ESB also strives to maintain a variety of finance sources to maximise the diversity of our funding base and to ensure we can flexibly use the most appropriate and cost-effective sources of funds.
We seek to raise funds on terms which mean our debt repayment profile is manageable and well-balanced, with no more than 25% of debt maturing in one year. We also target holding in reserve available committed facilities (or cash) equivalent to 12 - 18 months’ net funding requirements.
The majority of fundraising is done at the ESB parent level, or through our finance subsidiary, ESB Finance DAC, which is guaranteed by ESB.
ESB Financing and Risk Management
Risk management is central to our financing policies. Where possible, we try to match the currency of debt with the currency of the related income stream, or use derivative instruments to achieve this.
Derivative financial instruments can only be used to secure financial market risks (interest risks, currency risks, exchange-rate risks) as well as energy price risks, and only in conjunction with an underlying transaction (hedge). ESB does not hold or trade derivatives for speculative purposes.
ESB Credit Ratings
It is ESB’s goal to maintain financial ratios that support a minimum BBB+ stand-alone rating to sustain our financial flexibility and ensure access to a broad investor base for financing purposes. We are in continuous contact with the agencies which rate us (Moody’s and Standard & Poor’s) to ensure they are aware of our ongoing operating performance and all material issues affecting the company.
For further information on our credit ratings, click here.
ESB is committed to helping our investors make informed decisions about the Group. We seek to maintain a high level of transparency and welcome feedback and queries from investors, analysts and other members of the financial community as to how best we can meet your needs. We also hold regular meetings with investors in major European and US cities, conference calls with debt analysts and investors at least twice per year. We also have frequent engagements with our core relationship banks.
For more information, contact our Investor Relations team here.