Kenya: African Frontier Capital announces $65m off-grid solar financing vehicle

Posted on: 10 June, 2020 at 9:33 AM

Solar Frontier Capital (SFC), a wholly-owned subsidiary of African Frontier Capital (AFC), and d.light, a global innovator of solar energy products, have jointly announced the establishment of a $65 million financing vehicle, Brighter Life Kenya 1 Limited (BLK1).

BLK1 is an off-balance sheet financing vehicle, newly incorporated in Jersey, that is dedicated to acquiring pay-as-you-go (PAYGO) solar home system accounts receivables from d.light’s Kenyan subsidiary, d.light Kenya, to provide the company with flexible, working capital to finance its continued growth.

BLK1 has been structured to provide d.light Kenya with local currency financing (up to the Kenyan shillings equivalent of about $65 million in face value of receivables) over a two year commitment period and is intended as the first in a series of vehicles designed to provide d.light with continuing access to sustainable and affordable local currency receivable financing.

Part of BLK1 is being financed by a $20 million senior debt commitment from the U.S. International Development Finance Corporation (DFC). SFC acts as the subordinated lender and the master servicer under the transaction and, more generally, as sponsor of the structure.

Commenting on the transaction, d.light CEO Ned Tozun said, “We are excited to announce this innovative funding structure in partnership with SFC. BLK1 provides us with the flexible local currency receivable financing we need to make our Kenyan business sustainably cash flow positive, which is an important milestone for sustainability for d.light and the off-grid energy industry as a whole.”

“DFC is proud to team up with d.light and AFC to expand affordable energy to more than a million Kenyans living in off-grid communities,” said DFC managing director for Africa, Worku Gachou. “This innovative collaboration will deliver reliable electricity access that individuals depend on to live, cook, and learn and businesses require to grow, invest, and create jobs.”

Eric De Moudt, founder and CEO of AFC, remarked: “We have been very impressed with d.light as a leading innovator in the distributed energy access sector, and SFC is delighted to be partnering with them on this high impact receivables financing structure. We are greatly looking forward to supporting d.light with on-going access to affordable and sustainable financing to continue impacting so many lives in Kenya and around the world.”

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