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Solar firm Sun King gets Sh20bn loan for Kenya expansion
A sales-person at Sun King Kenya exhibition stand engages with a customer during the Nation Shopping Festival at the University of Nairobi grounds on December 7, 2023.
Off-grid solar energy company Sun King has secured a Sh20.16 billion ($156 million) loan from a consortium of banks and development finance institutions to provide solar products to an estimated 1.4 million low-income households and businesses in Kenya.
The loan, arranged by US lender Citi, is secured against future payments from customers who take up solar loans from Sun King, under what is known as a securitisation arrangement.
In addition to Citi, other participating banks include Absa, Stanbic Bank Kenya, KCB Bank, and Co-operative Bank of Kenya.
The senior debt from the lenders is complemented by subordinated (mezzanine) funding from three DFIs – British International Investment (BII), Dutch development bank FMO, and the Norwegian investment fund for developing countries, Norfund.
Neither the lenders nor Sun King disclosed the values of the split between the two debt tranches.
“This securitisation demonstrates the effectiveness of pay-as-you-go business models to reach underserved communities at scale and the role of development finance institutions in mobilising private capital,” said Citi global head of social finance, Jorge Rubio Nava.
This is the second such securitisation deal carried out by Sun King, following a $130 million (Sh16.8 billion) transaction completed in 2023.
Sun King’s model allows households to access solar products on credit, making daily payments starting from $0.19 (Sh24.55) through mobile money.
To date, the company has extended $1.3 billion (Sh168 billion) in solar loans to nearly 10 million individual customers across Africa.
“The transaction shows that African commercial banks believe in the power of pay-as-you-go solar and are ready to back it with serious capital. Return-seeking, local capital in local currency is essential to unlocking the scale and speed needed to achieve universal energy access,” said Sun King co-founder Anish Thakkar.
The company has been seeking to raise local currency capital in the various markets in which it operates, thereby minimising foreign exchange financing risk.
