Nairobi, 6 June 2023 – The Eastern and Southern African Trade and Development Bank (TDB) is participating in a first-of-its-kind, bank-led and entirely Kenyan-Shilling-denominated USD 130 million sustainable securitisation transaction established by Sun King and Citi. The transaction leverages Sun King’s existing and future Kenyan customers’ payments for solar products to raise funding for further growth and expansion.
Arranged by Citi and supported by leading development finance institutions including TDB and commercial lenders from six countries across the globe, the investment paves the way for future African securitisation deals and diversifies funding for Kenya’s off-grid solar energy sector. Through the proposed transaction, customers’ future payments for solar products bought on credit will be securitised and funded by investors.
Approximately three out of every ten Kenyans live without access to electricity. Many off-grid households devote 5 to 10% of their income to dim, smoky kerosene lanterns or smog-emitting gas generators for light and power. Solar energy offers clean and reliable energy as well as long-term cost savings for homes and businesses, but the upfront equipment cost blocks many Kenyan consumers from transitioning to solar energy.
Sun King designs, distributes, installs and finances solar energy solutions for African and Asian households and businesses who cannot access, rely on or afford traditional electric grid connections. Sun King customers can purchase products using the company’s technology-enabled, pay-as-you-go “Easy Buy” financing service, which breaks payments down into regular, affordable instalments. These payments can be made via mobile money or cash for as little as USD 0.15 a day. Approximately half of Sun King’s registered pay-as-you-go customers in Kenya are women, the majority of whom access formal financing products for the first time.
Under the securitisation structure, investors are financing the pooled expected future payments from over a million Sun King customers. The structure connects unbanked or underbanked customers to the finance they require to purchase solar assets and provides investors with access to a steady yet underserved market that offers risk-diversified returns.
Sun King is raising the securitisation funds using its Sustainable Financing Framework, which has received a Second Party Opinion (SPO) from Moody’s Investor Relations (“Moody’s”). The SPO assesses the framework with a Very Good Sustainable Quality Score (SQS) and highlights its significant contribution to sustainability. The framework, facilitated by Citi, explains Sun King’s approach to integrating sustainability considerations into specific financial instruments, which facilitate enhanced access to clean energy and contribute to meeting the United Nation’s Sustainable Development Goals.
This securitisation involves participations by both commercial and development finance institutions, including ABSA Kenya, British International Investment, Citi, FMO, Norfund, Standard Bank Kenya and TDB. Citi served as the sole arranger, primary placement agent, security agent, facility agent, cash manager, sustainability structuring bank and secured accounts bank with Standard Bank Kenya acting as the co-placement agent.
Michael Awori, TDB CEO said: “TDB has been active in financing the energy transition via several projects in wind, geothermal, hydro and solar energy, as well as other sectors. We are very pleased to participate in this innovative transaction, which will reach over one million customers in Kenya, while indirectly contributing to other development outcomes such as job creation, quality of education, increased health and environmental benefits, and more. This is our third transaction in the region leveraging pay-as-you-go technology to boost access to electricity for the most vulnerable customers, and contributing to SDGs 7 and 13.”
Anish Thakkar, Co-Founder, Sun King said: “Over one billion people live off the reliable electric grid. This number is projected to rise. Sun King’s proven pay-as-you-go service dismantles the up-front cost barrier that blocks consumers from purchasing solar energy systems. This securitisation could be key to unlocking the extensive capital needed to fund solar energy initiatives at the scale the climate crisis requires.
“We applaud Citi for orchestrating this innovative transaction, which brings together leading organisations from across development finance and commercial banking sectors. We thank all the investors for their support and trust. These trailblazing financial mechanisms can convert the global challenges of energy access, social development and climate action into compelling investment opportunities.”
Manolo Falco, Global Co-Head of Investment Banking at Citi, said: “Sun King has been an important client for many years and we are pleased to be supporting them with this catalytic transaction. Our unrivalled global network and track record for delivering innovative sustainable finance solutions means we are expertly placed to build local sustainable financial infrastructure from the ground up.
About the transaction
- This latest transaction follows a landmark transaction for Sun King (Greenlight Planet) in 2021, which saw the solar panel company receive a USD 75m-equivalent KES-denominated Sustainable Finance Facility
- Moody’s Investor Services has evaluated the framework. The rating affirms Sun King’s Significant contribution to sustainability and alignment with Green and Social Bond and Loan principles set by organisations such as the International Capital Market Association, Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications and Trading Association
About the Kenyan market opportunity
- Kenya has a dynamic digital ecosystem and is a longstanding leader in technology innovation and access to digital infrastructure across Sub-Saharan Africa
- Today, 98% of Kenyans use mobile money and 65% have access to the internet
- Pay-as-you-go (PAYG) technologies, combined with mobile payments, have enabled a new wave of consumer asset financing for low-income customers. While growth of mobile money has enabled cost-effective payment collection from remote customers. PAYG solar has emerged as one of the strongest use cases for this technology, and the sector has matured from a handful of pilots to a global industry in under a decade
Established in 1985, the Eastern and Southern African Trade and Development Bank (TDB) is a regional development finance institution, with investment grade ratings and assets of USD 8.4bn. TDB serves 25 member states in its region, with the mandate to finance and foster trade, regional economic integration and sustainable development, through trade finance, project and infrastructure finance and asset management.
TDB is part of TDB Group, which also comprises the Trade and Development Fund (TDF), Eastern and Southern African Trade Advisers Limited (ESATAL), TDB Captive Insurance Company (TCI), and the TDB Academy.
Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in nearly 160 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.
Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn:www.linkedin.com/company/citi
About Sun King
Sun King is the world’s largest off-grid solar energy company with cutting-edge product design, affordable financing, and a grassroots installation model to provide energy to the 1.8 billion consumers across Africa and Asia who lack access to reliable electricity. Founded in 2007, Sun King sets the gold standard for off-grid solar performance and design as part of its mission: powering access to brighter lives. For more information, please visit: www.sunking.com.
To date, Sun King has brought power and light to the lives of over 100 million people. As of March 2023, Sun King’s solar products have offset approximately 27.8 metric tonnes of carbon emissions. This is roughly the equivalent of taking 6.1 million gasoline-powered vehicles off the road for one year.
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