Global off-grid energy company, Sun King, is set for $130 million (Sh18 billion) financing that will see it sell products such as solar lanterns to customers in Kenya on credit, with expected payments to be used to settle the debt.
Sun King and Citibank on Tuesday announced the Kenyan-shilling-denominated deal, structured as a sustainable securitisation transaction, that will see development finance institutions and commercial lenders including British International Investment, Absa Bank Kenya and Stanbic Kenya team up to provide the funds.
The money will allow Sun King, formerly known as Greenlight Planet, to sell eco-friendly products such as solar lanterns, solar home systems and solar inverters on credit.
Under the securitisation structure, the institutions are financing the pooled expected future payments from over a million Sun King customers.
The structure connects the unbanked or underbanked customers to the finance they require to purchase solar assets while providing participating financial institutions with access to a pooled market.
The unique deal involved Citibank, which apart from being one of the financiers, was the sole arranger and lead placement agent.
Standard Bank Group was the co-placement agent.
“Sun King has been an important client for many years and we are pleased to be supporting them with this catalytic transaction,” said Manolo Falco, global co-head of investment banking at Citi.
Other banks and development finance institutions that have provided the money are FMO, Norfund, and the Southern African Trade and Development Bank.
Sun King designs, distributes, installs and finances solar energy solutions for African and Asian households and businesses through its pay-as-you-go financing service, which breaks payments down into regular, affordable instalments of as little as Sh20 a day.
“Sun King's proven pay-as-you-go service dismantles the up-front cost barrier that blocks consumers from purchasing solar energy systems,” said Anish Thakkar, co-founder at Sun King.
“This securitisation could be key to unlocking the extensive capital needed to fund solar energy initiatives at the scale the climate crisis requires.”
Sun King has operated for over a decade in Kenya supplying different solar-powered products that are popular with households not connected to the grid.
The firm in July last year launched in Kenya a 24-inch solar-powered television which comes as part of the Sun King Home 400 plug-and-play solar home system.
The system comes with two tube lights, two hanging lights, a motion-sensor security light, and an optional torch and radio.
The uptake of solar products has been rising in Kenya, especially in rural areas.
Customers are usually attracted to the flexible payment plan that allows them to start enjoying the products upfront.