Shell Treasury Fuels Renewable Ambitions

Integrating Sprng Energy (Sprng), a leading wind and solar renewable energy platform with 1.8 GW capacity in operations and 1.9 GW under construction/contract, into its global banking infrastructure, Shell has set a new benchmark for treasury best practices. By harmonising their bank accounts, Shell unlocked significant efficiency gains while implementing innovative solutions such as multi-entity cash concentration structures and optionally convertible debentures (OCDs). These strategies optimised Sprng’s liquidity management, creating robust ways of treasury management that empowers their renewables business to thrive in a rapidly evolving energy market.

Following its acquisition of Sprng in 2022, Shell faced the challenge of integrating a renewables business that operates across 38 special purpose vehicles (SPVs) in India, each at different stages of their project life cycle.

This complexity was compounded by India’s intricate regulatory environment, which presented multiple challenges around capital injection, cash management, and compliance with strict FX controls. Additionally, Sprng’s previous banking structure was cumbersome due to a mix of local banks and non-bank providers.

Shell worked closely with HSBC to transform Sprng’s banking organisation. Together, they simplified the banking structure and greatly reduced their total number of bank accounts while implementing centralised cash visibility through HSBC’s digital platform. This streamlined set-up included advanced cash forecasting capabilities, automated payment processing, and yield enhancement which adds to Sprng’s operational efficiency.

Thinking outside the box

One of the project’s most impactful achievements was the rapid establishment of a foreign venture capital investment (FVCI) account to enable group funding through OCDs. This method of capital infusion eliminated the constraints previously posed by project financing, providing Sprng with the flexibility to deploy funds where needed. Through HSBC’s expertise the FVCI custodian account was established quickly, and Shell was able to address Sprng’s liquidity needs in an swift manner.

The other key innovations from the close collaboration were the enablement of domestic intercompany loans and a multi-entity cash concentration structure to further optimise liquidity. In addition, automated cluster deposits were introduced to maximise excess liquidity with fixed tenures, enhancing yield and ensuring cash availability for Sprng’s dynamic project requirements. Shell also hedges their FX risks using a holding company/treasury centre via onshore and offshore markets.

A robust foundation for future success

The simplification of treasury operations has resulted in substantial resource and cost savings. The transformation has equipped Sprng with innovative treasury solutions to manage its expanding portfolio of renewable energy projects, deservedly netting Shell and Sprng the Best in Class Treasury – Asia accolade at this year’s TMI Awards. Through close collaboration with HSBC and leveraging on the bank’s expertise, Shell has empowered Sprng’s growth and set the standard for treasury practices in the renewables sector, creating a robust foundation to drive the energy transition forward.