Fast and transparent: Executing a transferable tax credit transaction on Crux in just 22 days.

June 26, 2024

Getting started in the transferability market

Earlier this year, Crux worked with a public utility company to sell a two-year strip of wind energy production tax credits (PTCs) covering electric generation in 2023 and 2024 to a Fortune 500 company.

Before approaching Crux, the utility sought to sell their PTCs on their own but faced challenges when it came to executing a transaction. They partnered with Crux given the combination of the technology platform, the breadth of the buyer network, and expertise in partnering with utilities.

Leveraging Crux technology to move quickly

Crux worked with the utility from listing to closing to ensure they received optimal value for the tax credits and the transaction moved quickly.

After listing, Crux’s platform automatically distributed their digital credit teaser to buyers and buyer advisors with matching preferences. Crux ran a solicitation process which enabled the seller to offload some of the administrative complexity of reviewing multiple bids. The Crux team was able to solicit buyer interest, conduct an initial screen of bids for competitiveness, and deliver a summary of top bids to the utility at the close of the solicitation period. After matching with a buyer, the utility was also able to use the Crux platform to add buyers who approached the tax team bilaterally.

Within just six business days of listing, the utility had generated more than 15 non-binding bids on their PTCs. The utility tax team had the ability to use the Crux platform to review all of the non-binding bids, that included the outline of pricing, payment terms, and high level counterparty information - and then run down-selection.

The buyer with the leading bid was a Fortune 500 buyer, exploring their first transaction in transferable clean energy tax credits. The buyer was under a tight timeline in order to meet their tax filing and payment schedule. They managed the deal with support only from their legal counsel, who ran the due diligence process and managed contract drafting to ensure the buyer was sufficiently protected in the transaction.

Crux’s data room and workflow tools successfully helped the counterparties manage an efficient and quick transaction: closing the deal in only 22 days.

The buyer has since executed a second transaction in 2024 tax credits on credits on Crux.

Pricing transparency

Using an anonymous platform enabled the public utility company to solicit bids from a wide variety of partners without exhibiting favoritism, and ultimately delivering the best deal possible for the company and its stakeholders.

For a regulated utility business, this process supports the compliant and efficient transaction in transferable credits. Tax credits are a valuable instrument for a utility and its customers and investors. The anonymous process Crux facilitates ensures that the utility can obtain objective and competitive pricing.

Takeaways: by using technology to streamline the process and surface price discovery, the Crux platform can quickly and fairly drive buyers and sellers to a done deal

  1. Speed: The transaction was completed in just over three weeks, allowing the buyer to leverage the tax credit purchase to meet their tax obligations and internal deadlines. Crux’s comprehensive data room and workflow tools simplified the due diligence process and streamlined the transaction, to the benefit of both parties.
  1. Transparency and Fairness: Crux’s transparent and anonymous bidding process ensured that the publicly-regulated utility received optimal pricing and deal terms for their tax credits, and eliminated market inefficiencies they may have experienced in a traditional sale process.

If you’d like to learn more about Crux and engage in the growing market for transferable tax credits, get in touch today.

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