GCPF PARTICIPATES IN LARGEST-YET OFF-GRID SOLAR FINANCING FACILITY
The Global Climate Partnership Fund contributes to the largest-yet receivables financing facility in the off-grid solar space benefiting Kampala-based off-grid solar provider SolarNow. The USD 9 m facility is SolarNow’s third structured asset finance instrument arranged by SunFunder. It will enable the company to deploy 17,500 new off-grid solar systems to customers in Uganda, along with a range of appliances.
There are 1.2 bn people in developing countries with no access to electricity, while another billion only have unreliable access. Solar power now offers an economic solution for people living off-grid in rural areas, providing lighting, mobile phone charging and even highly-efficient televisions and fridges. A new generation of solar companies have emerged to deploy these systems commercially, but many have struggled to access mainstream financing to fuel their growth.
The structured asset finance instrument (SAFI) is a tailored receivables financing structure designed by SunFunder for solar companies deploying systems through pay-as-you-go and solar leasing models. SAFI finances their credit offerings directly, allowing them to reach more customers.
SolarNow CEO Willem Nolens commented: “This syndication and the SAFI structure allow us to minimize the fundraising burden and to focus on our business instead. By selecting the right clients and treating them well, our credit portfolio remains healthy and we create a strong foundation for sustainable growth.”
The new systems will amount to around 2.5 MW of new installed off-grid solar capacity, resulting in over 210,000 tons of greenhouse gas emissions avoided through displaced kerosene for lighting. Among the expected impacts, the company estimates that over 70,000 Ugandan women will gain improved energy access.
The new investment marks the 5th anniversary of SolarNow’s partnership with Nairobi-based SunFunder. It is also the second time that Oikocredit and a responsAbility-managed private debt fund have participated with SunFunder to finance the company, after a similar USD 6 m syndication 14 months ago.
The facility is the third syndication arranged by SunFunder with responsAbility and Oikocredit, showing the ongoing importance of specialist origination and collaborative investments for emerging market solar. The three investors also worked on a multi-currency syndicated debt facility for PEG Africa in Ghana and Cote d’Ivoire.
Peter Page, Direct Investments, Energy Debt Financing at GCPF manger responsAbility, added: “We were excited to see SolarNow’s successful growth ever since we teamed up with SunFunder to finance the company a little over a year ago and look forward to supporting SolarNow as a long-term financing partner.”
responsAbility Investments AG
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About SolarNow (www.solarnow.eu)
SolarNow is a for profit social business which sells, finances and installs modular solar systems (50Wp to 20kW) and solar appliances (LED tubes, TVs, fridges, water pumps, flat irons, etc.) to households and businesses in East Africa. Through a network of 55 branches and 850 staff in Uganda and Kenya, the company provides last mile distribution, up to 2 year financing and 5 year free service to its clients. To date SolarNow has served more than 35,000 clients. Client repayment exceeds 97%, reflecting high client satisfaction and rigorous credit assessments and management.