$127m securitisation vehicle for off-grid solar sector in Kenya
Solar Frontier Capital Limited, solar energy products innovator d.light and Norfund have jointly announced the expansion of Brighter Life Kenya 1 Limited (BLK1). The expansion sees Norfund join the United States International Development Finance Corporation (DFC), which acted as the original cornerstone senior lender, in the structure as a co-senior lender.
BLK1 is an off-balance sheet financing vehicle that is dedicated to acquiring pay-as-you-go solar home system accounts receivables from d.light’s Kenyan subsidiary. It has been set up 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 $127 million in face value of receivables purchased) over a two year commitment period.
Part of BLK1 is being financed by a senior debt facility with $20 million of commitments from DFC and $15 million from Norfund. Solar Frontier Capital 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 that Norfund has joined the Brighter Life Kenya funding structure which we have in partnership with Solar Frontier Capital. BLK1 provides us with the flexible local currency receivable financing we need to make our Kenyan business sustainably cash flow positive. Being cash flow positive is a key metric of business sustainability and will enable us to grow and to impact many more lives in Kenya for the long term.”
“As a long-term equity investor in d.light, Norfund has been impressed with how d.light has given millions of people access to clean energy. Access to flexible and affordable working capital is vital for the company to continue its impressive growth. We are pleased to be part of the solution for d.light in securing suitable financing through this novel financing structure for d.light and the sector as a whole,” said Mark Davis, executive vice president for clean energy in Norfund.
“DFC is pleased to have Norfund leverage DFC’s original facility and join this innovative structure that expands affordable clean energy to more than a million Kenyans living in off-grid communities,” said DFC vice president for structured finance and insurance Tracey Webb.
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