The $9m facility is SolarNow’s third structured asset finance instrument, known as SAFI, 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.
According to SolarNow CEO Willem Nolens: “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 investment marks the 5th anniversary of SolarNow’s partnership with Nairobi-based SunFunder, and their debt facility together. 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 $6m syndication 14 months ago.
SunFunder’s Director of Investments Surabhi Visser commented: “We have just had our 5-year anniversary working with SolarNow, and this takes us to $19m in investments that we’ve arranged or made directly in the company. We are proud to have backed SolarNow’s growth delivering top quality solar systems and appliances throughout Uganda.”
The new systems will amount to around 2.5MW 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 women will gain improved energy access in Uganda.
Oikocredit’s Renewable Energy Manager David ten Kroode commented: “We’re proud to support the continued growth of SolarNow. Their strategy of offering a wide range of solar products and services to energy-poor communities is perfectly aligned with Oikocredit’s mission to help alleviate poverty by improving access to energy.”
The SAFI product 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.
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.
responsAbility’s Stefan Issler, Head of Direct Investments, Energy Debt Financing, 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.”
SunFunder earlier on raised $25 million from Overseas Private Investment Corporation (OPIC) to its Solar Energy Transformation (“SET”) Fund which is set to achieve a target fund size of $85 million.
The SET Fund — SunFunder’s eighth and largest debt facility — will hold its first close in the coming months. As a 9-year fund it will extend the range of financing that SunFunder already provides to the beyond grid solar sector.
OPIC previously committed $15 million in financing and $10 million in political risk insurance to another fund managed by SunFunder, the Beyond the Grid Solar Fund, which provides financing for off-grid companies located in Africa, India, and the Pacific Islands. To date, the Beyond the Grid Solar Fund has provided loans to 16 off-grid solar companies, which have helped bring electricity to 1.55 million people.
SunFunder says it projects the SET Fund will make individual loans to more than 50 off-grid solar companies located in Africa and Asia, which in turn will enable more than three million people to gain access to clean, affordable energy and lighting.
OPIC’s $25 million will provide loans to companies developing off-grid solar products and solutions for the millions of people in Sub Saharan Africa and Asia who lack access to electricity.