Brighter Life Kenya 1 Ltd (BLK1), a local currency off-balance sheet financing vehicle servicing solar home system (SHS) company d.light design inc, has been expanded to $127m following a $15m investment by Norfund. African Frontier Capital (Mauritius) LLC’s Solar Frontier Capital Ltd (SFC), d.light, and Norfund announced the new senior debt package on 21 January.
The expanded vehicle is expected to provide improved energy access to 1.9m people living off-grid in Kenya and to displace 600,000 tons of greenhouse gas emissions.
BLK1 was set up to acquire pay-as-you-go (PAYG) accounts for SHS customers from d.light. This allows d.light to reinvest the proceeds while providing a longer-term income stream for BLK1. Off-balance sheet vehicles for receivables have been discussed for some time in the SHS industry to help accelerate growth but progress has been slow (AE 359/5 ).
Norfund joins the United States International Development Finance Corporation (DFC) as a senior lender to BLK1. DFC is providing a $20m debt facility to the vehicle. SFC was established in 2017 with backing from US Agency for International Development’s Scaling Off-grid Energy Partnership Programme as a dedicated vehicle for providing working capital to PAYG solar companies. It is the subordinated lender to BLK1 and master servicer for the Norfund transaction.
“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”, Norfund executive vice president for clean energy Mark Davis said. “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.”
Allen & Overy LLP, Kaplan & Stratton, and Walkers (Jersey) LLP all advised on the transaction.
Image: Mini-grids and off-grid commercial and industrial projects in Kenya. Source: African Energy Live Data
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