Red Eléctrica has signed world-first multi-currency syndicated loan delivered through blockchain technology. The company carried out this operation with three banking entities: BBVA, BNP and MUFG, for a loan of 150 million euros. This is “an important step forward among the initiatives being carried out in the market to explore the potential of this type of technology that is earning increasing relevance in the corporate financial operations in recent months ” Red Eléctrica noted.
The transaction was arranged over the deployment of a private blockchain network through which the following six participants interacted in the process: Red Eléctrica Corporación, the three financing banks: BBVA, as sole bookrunner, BNP and MUFG, and the two legal advisers: Linklaters LLP and Herbert Smith Freehills LLP. This high number of participants, a characteristic of syndicated financing, makes the advantages of blockchain technology especially visible.
The use of blockchain technology during the negotiation has allowed to reduce the time and guarantee the transparency and traceability of the contracting process. Each step of the negotiation, up to the contracting, generates a record of both the user and the moment in which it was made. In this way, all the relevant information of the operation is shared between the participants nodes in the private blockchain (Hyperledger), allowing them to permanently know the status of the negotiation and guaranteeing the immutability of the information.
Finally, once the contract is signed, a hash or unique identifier of the document is registered in the public blockchain Ethereum (in its testnet test network), to guarantee the immutability before third parties, and maintaining confidentiality at any time.
According to Teresa Quirós, Red Eléctrica’s economic-financial corporate director, “this operation is part of the initiatives that our company is launching to boost digital transformation and innovation as levers of growth and efficiency, which will address the challenges that the Energy transition poses us as a company “.
Blockchain technology in digital transformation
Digital technologies open new doors to improvements in efficiency and the emergence of innovative business models, drive cultural change in companies and undeniably place data as one of the core assets of companies. In this sense, the company considers the signing of this loan as “one further step to increase the operational efficiency of Red Eléctrica and to continue advancing in its digital transformation strategy”.
Indeed, an essential part of this strategy is the monitoring and adoption of new initiatives in this field, which has made it possible to identify the blockchain as one of the opportunities for the creation of value and the introduction of greater flexibility and streamlining of processes and activities.
In addition to the signing of the syndicated loan based on blockchain, more than twenty possible use cases of this technology have been assessed in Red Eléctrica and will be tested during the next year.