Kenyan commercial banks have backed a Ksh19.3 billion ($150 million) financing deal to accelerate the rollout of off-grid solar energy solutions across the country.
The deal, led by solar energy company Sun King and arranged by Citi, will allow the firm to expand in Kenya by supplying over 1.4 million solar home systems to households.
Moreover, Kenyans living in remote areas that lack access to the national electricity grid will be the biggest beneficiaries.
Sun King raised the funds by bundling future payments from its customers into an asset-backed security, a financial product backed by expected income from its “pay-as-you-go” solar systems.
The system allows Kenyans to pay a deposit, around Ksh1,000, and then make weekly payments for 12 to 18 months to fully own the system.
Also Read: Kenyan Students Build Ksh750K Solar Powered Car
Sun King Explains Financing From the Kenyan Banks
The financing is split into two parts. The senior tranche, a lower-risk investment, attracted the interest of leading Kenyan commercial banks, including Absa Bank Kenya, Citi, KCB Bank Kenya, Co-operative Bank, and Stanbic Bank Kenya.
Consequently, the banks are expected to earn a premium above Kenya’s six-month government bond yield, which currently stands at 8.4%.
On the other hand, the mezzanine tranche, which carries higher risk and would be the first to absorb losses if customers default, was bought by development finance institutions (DFIs) such as British International Investment (BII) and the Dutch development bank FMO.
“This is an example of how to create structures that enable private capital to come in at scale. It’s important for DFIs to be in the mezzanine, and that’s where they can provide a cushion to the senior private capital lenders,” said Jorge Rubio Nava, Citi’s Global Head of Social Finance.
According to the European Investment Bank, over 600 million people across Africa still lack access to electricity.
Therefore, private sector-led off-grid solutions are seen as a practical and scalable way to bridge the energy access gap.
Also Read: Stanbic Invests Ksh78.2 Billion in Trade, Housing, and Solar Energy
Previous Funding Raised by the Company
The company had previously raised Ksh17 billion ($130 million) using a similar model in 2023, but this latest round marks a major shift by bringing commercial banks into the fold.
Sun King plans to increase its distribution network, manufacture more solar kits, and bring clean, affordable energy to thousands of underserved communities across Kenya.
“What makes this work is that we collect small, steady, and predictable payments from millions of customers. Then we bundle those payments together and securitize them,” said Anish Thakkar, co-founder of Sun King.
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