Sun King and Citi have introduced a groundbreaking funding initiative called sustainable securitisation, which is unique in that it is led by a bank and denominated in Kenyan Shillings. This transaction, amounting to $130 million, utilizes the payments made by Sun King’s existing and future Kenyan customers for solar products to raise funds for the company’s growth and expansion.
Citi arranged the transaction and garnered support from prominent development finance institutions and commercial lenders across six different countries. This investment sets the stage for future securitisation deals in Africa and diversifies the funding options available for Kenya’s off-grid solar energy sector. Through this innovative transaction, investors will provide the funding by securitising the future payments made by customers who purchase solar products on credit.
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Around 30% of Kenyans currently lack access to electricity, with many households relying on dim, smoky kerosene lanterns or pollution-emitting gas generators for lighting and power. Solar energy presents a clean and reliable alternative that offers long-term cost savings for homes and businesses. However, the upfront cost of solar equipment prevents many Kenyan consumers from transitioning to solar energy.
Sun King specializes in designing, distributing, installing, and financing solar energy solutions for households and businesses in Africa and Asia that are unable to access or afford traditional electricity grids. The company offers a technology-enabled, pay-as-you-go financing service called “Easy Buy,” which allows customers to purchase products through affordable, regular installments. Payments can be made using mobile money or cash, starting from as little as $0.15 per day. Notably, more than half of Sun King’s registered pay-as-you-go customers in Kenya are women, many of whom are accessing formal financing products for the first time.
In the securitisation structure, investors finance the aggregated future payments from over a million Sun King customers. This framework enables unbanked or underbanked customers to access the necessary financing to purchase solar assets while offering investors an opportunity to enter an underserved market with diversified returns.
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Sun King is raising funds through securitisation using its Sustainable Financing Framework, which has received a positive assessment, known as a Second Party Opinion (SPO), from Moody’s Investor Relations. Moody’s has given the framework a Very Good Sustainable Quality Score (SQS) and recognizes its substantial contribution to sustainability. The framework, facilitated by Citi, outlines Sun King’s approach to integrating sustainability considerations into specific financial instruments, thereby enhancing access to clean energy and contributing to the achievement of the United Nation’s Sustainable Development Goals.
This securitisation involves the participation of both commercial and development finance institutions, including Absa Bank Kenya PLC, British International Investment, Citi, FMO, Norfund, Stanbic Kenya, and the Southern African Trade and Development Bank. Citi plays multiple roles in the transaction, acting as the sole arranger, lead placement agent, security agent, facility agent, cash manager, sustainability structuring bank, and secured accounts bank. Additionally, the Standard Bank Group serves as the co-placement agent in the transaction.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard