Month: January 2022

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and SBM Bank Kenya, a local commercial bank, provided a KES 1.6 billion (c. USD 15 million) financing solution to Bboxx Kenya, a next generation utility company, to invest in affordable solar home systems for 470,000 Kenyans. GuarantCo supported the transaction with a KES 1.2 billion (USD 11.25 million) partial credit guarantee of 75 percent against the loan facility.

Historically investments on the African continent in the off-grid SHS sector have been made in hard currency, which can expose companies to significant exchange risks. Through mobilising a local bank, the guarantee will match the currency of funding needs with operations and collections and so contribute to the overall sustainability of the business. This is expected to have wider market benefits through demonstrating a model for domestic banks and increase their appetite to lend to the sector.

The funds will be used by Bboxx Kenya to purchase new inventory over the next two years including 89,600 solar home systems and essential appliances such as fridges and phones. These are expected to serve 470,000 people, 80 percent of whom are based in rural areas and the majority of whom currently use torches and non-traditional fuel, such as wood and kerosene, as their main source of lighting.

Kenya’s electrification rate is estimated at around 70 percent though there is some disparity between urban (90 percent) and rural areas (60 percent). The Kenya National Electrification Strategy, developed in 2018, demonstrates the Government of Kenya’s commitment to scaling up off-grid electrification with ambitions to establish two million new connections by 2022, notably through solar home systems and mini-grids.

The transaction will contribute to United Nation’s Sustainable Development Goals: Affordable and Clean Energy (SDG 7) and Climate Mitigation (SDG 13) through increasing access to affordable and reliable energy.

At present, Bboxx Kenya employees 350 workers, 40 percent of which are women, and the company intends to maintain this proportion of female employment as the workforce as it grows.

The transaction will enable the creation of a further hundred new long-term jobs with efforts to provide opportunities for women in the process.

Emily Bushby, COO/CFO of GuarantCo, said: “We are delighted to partner with Bboxx and SBM Bank to make this solar home systems transaction happen to the benefit of people in Kenya.  This is our sixth deal and first off-grid solar project in Kenya.  We are proud to support the Kenyan government in its ambition to grow its off-grid capabilities and improve affordable, clean energy access to local people while involving the private sector and provide local currency infrastructure project financing which is at the core of GuarantCo’s business.”

Mansoor Hamayun, CEO of Bboxx, said: “We are very pleased to partner with GuarantCo and SBM Bank to accelerate access to clean, reliable, and affordable energy to hundreds of thousands of Kenyans. This fund marks a big milestone in our industry’s history. This transaction shows what is possible to achieve when forging partnerships between different stakeholders to mobilise private capital to the energy sector. This transaction is the largest single loan raised by Bboxx Kenya, it will enable us to unlock potential and transform even more lives for the better through energy access in Kenya. It is a positive step in the right direction in securing more funds to help tackle the global energy access gap and make progress towards meeting UN Sustainable Development Goal 7 – energy for all.”

Jeff Vanden Berghe, MD of Bboxx Kenya, said: “Over the past 12 months we have been working closely with GuarantCo and SBM to bring this partnership to fruition. This marks Bboxx Kenya’s first local currency transaction, which allows us to bring more renewable, low-cost and safe energy to an extra 470,000 Kenyans. The partnership will also help us expand our services to more remote regions of the country, working with the Government of Kenya, through its KOSAP program, to bring power to underserved communities.”

Jotham Mutoka, Deputy Chief Executive Officer of SBM Bank Kenya, said: “SBM Bank is elated to spur the growth of the energy sector in Kenya through partnerships with like-minded entities such as Bboxx and GuarantCo. Through this transaction, I envision school children being able to access electricity at home to complete their schoolwork when in the past they were in darkness, this will uplift the social-economic status of the entire home leading to a smarter tomorrow.”

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia, Sweden and the Netherlands, through the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 171 infrastructure projects to financial close which provided an estimated 217 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC www.pidg.org

About Bboxx Kenya

Bboxx is a next generation utility, transforming lives and unlocking potential through access to energy. Bboxx manufactures, distributes and finances decentralised solar powered systems in developing countries. It is scaling through forging strategic partnerships and its innovative technology Bboxx Pulse®, a comprehensive management platform using IoT technology. Through affordable, reliable, and clean utility provision, Bboxx is bringing people into the digital economy, creating new markets, and enabling economic development in off-grid communities and those living without a reliable grid connection. The company is positively impacting the lives of more than 2 million people with its products and services in over 27 markets, directly contributing to 11 of the 17 United Nations Sustainable Development Goals. In Kenya, Bboxx has positively impacted the lives of 570,000 Kenyans. www.bboxx.com

About SBM Bank Kenya

SBM Bank Kenya is a leading and trusted financial institution with an international footprint, headquartered in Mauritius and positioned to offer an unprecedented banking experience in Kenya to retail, SME and corporate clients. The bank started its operations in Kenya in May 2017 and currently has a branch network of 40 branches countrywide. This is complemented by customer touch points such as a round the clock contact centre, ATMs, mobile banking, online banking and extensive agency banking services. Additionally, SBM Bank Kenya operates as an Authorised Depository and as an Authorised Securities Dealer following a license issuance by the Capital Markets Authority. SBM Bank Kenya is regulated by the Central Bank of Kenya.

SBM Bank Kenya is a subsidiary of SBM Group Holdings, Mauritius. The Group is mainly owned by the Government of Mauritius and associated entities.

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and Bank Alfalah have provided Shams Power with a PKR 2 billion (c. USD 11.3 million) financing solution to support the construction of approximately 21 MW small rooftop and ground mounted solar plants at commercial, industrial and institutional (e.g. university, hospital) sites across Pakistan to reach grid connected users.

In addition to GuarantCo’s existing guarantee of PKR 1.5 billion (c. USD 9 million), covering 75 percent of the loan facilities, the company has committed an additional guarantee of PKR 1.5 billion to support Shams Power’s debt raising in 2022 to construct a further 21 MW of distributed solar plants.

Against GuarantCo’s guarantee facility, Bank Alfalah will provide the PKR 2 billion first phase of financing in the form of a 10-year term loan that benefits from the Renewable Energy Refinancing Scheme set up by the State Bank of Pakistan.

The project will improve Pakistan’s power sector efficiency by producing clean and green power near the point of usage, thus reducing wastage and line losses associated with the national grid and by stabilising the grid at peak times.  Shams Power helps to reduce carbon emissions and has a positive impact on mitigating climate change through the provision of clean, sustainable solar power.

This transaction has the potential to transform the rooftop solar market in Pakistan by demonstrating the ability for rooftop solar providers to access debt funding locally; this will allow for developers to scale up to unlock more solar potential. The transaction also builds the capacity of energy regulators and the State Bank of Pakistan (SBP), allowing them to create a supportive and practical regulatory and financial framework whilst also building the capacity of banks who are new to this asset class. Shams is also committed to continue the provision of training and potential employment opportunities to female engineers as the company grows.

Shams Power offers a Build Operate Own and Transfer (BOOT) model to commercial, industrial and institutional customers. Being the pioneer in Power Purchase Agreement (PPA) based clean energy generation and BOOT model in Pakistan, they faced challenges in raising funds for further expansion and therefore GuarantCo’s support was required. Their business model is to build and operate small solar power generation units at commercial, industrial and institutional sites, serving the local private sector, including SMEs, through its own complete solutions under long-term (10-20 years) PPA or equipment sales on deferred basis agreements.

Business and institutional users will benefit from lower electricity costs through the rooftop systems installed without incurring any upfront capital expenditure. The proposed solution also increases users’ electricity reliability and reduces their reliance on back-up diesel generators. Given climate considerations and business continuity reasons, Shams Power’s solution represents an efficient alternative to existing solutions. In addition, the transaction will lead to long-term job creation in the project value chain. It is expected that there will be over 60 local permanent jobs created by Shams Power.

Emily Bushby, Interim CEO of GuarantCo, said:

“The innovative financing mechanism for this transaction has the potential to drive significant growth in the rooftop solar market in Pakistan. The model is scalable, replicable and the need for guarantee support will hopefully reduce over time. This transaction supports Pakistan’s commitments to decarbonise its power sector and to meet GuarantCo’s mission of mobilising new sources of local currency financing. Through our transaction with Shams Power, we will support Pakistan in its ambition to provide economical, clean and consistent energy supply to businesses and gradually shift towards renewable energy supply and improve energy access, involving the private sector and local currency financing.”

Omar Malik, CEO of Shams Power, said:

“We are delighted to have successfully completed this landmark transaction. This will enable Shams Power to expand our portfolio of high-quality projects across the C&I sector and extend our renewable energy footprint. These projects will enable our clients to reduce their carbon emissions, meet sustainability targets, and reduce costs of production. They will also generate employment during construction. GuarantCo’s credit guarantee and Bank Alfalah’s tremendous support were critical in making this possible.”

Atif Bajwa, CEO of Bank Alfalah, said:

“While Bank Alfalah is at the forefront of facilitating our clients’ energy needs, this is a first of its kind distributed solar model of such magnitude for the Bank. Successful execution of this model will not only set up a framework for future distributed solar projects to follow but will also pave way for numerous businesses to achieve significant energy savings with minimal capital expenditure. In line with Bank Alfalah’s Green Banking policy, Bank Alfalah remains committed towards renewable energy financing and is proud to play its part in reducing carbon footprint across Pakistan and combating climate change. We would also like to applaud State Bank of Pakistan’s Financing Scheme for Renewable Energy which is encouraging investments and taking us a step closer to achieving the government’s clean energy vision.”

Asif Elahi, Partner of Capital Resource, said

“We are thrilled to have had the opportunity of supporting Shams Power in achieving their financing objectives. There has been exponential growth in roof top solar power in regional countries with us lagging behind. The credit enhancement and financing support from GuarantCo and Bank Alfalah teams will go a long way in helping bridge this gap allowing Shams Power to become the leading distributed solar company in Pakistan.”

• ILX’s investment strategy identifies high-impact, SDG-focused private-sector loans in emerging markets, arranged by the leading international development banks

• Dutch Ministry of Foreign Affairs and German and UK development agencies supported the creation of ILX during its development phase since 2017

• The incubation support is in line with the donor’s ambitions to mobilise private capital for development finance and the UN Sustainable Development Goals (“SDGs”)

• ILX will co-invest with the leading Multilateral Development Banks (MDBs) and other Development Finance Institutions (DFIs), enabling them to mobilise institutional capital in support of the SDGs and their Climate Finance commitments

• Dutch pension provider APG invests USD 750 million on behalf of its pension fund clients ABP and bpfBOUW, thus strengthening its financial commitment to the UN Sustainable Development Goals (SDGs) in emerging markets

17 January 2022, AMSTERDAM – Cardano Development and ILX Management B.V. (“ILX”), the SDG-focused, emerging market private credit asset-manager, are pleased to announce the first closing of ILX Fund I. Dutch pension provider APG, on behalf of its pension fund clients ABP and bpf BOUW, invests USD 750 mln. This new private credit fund invests in private-sector loans arranged by the leading Multilateral Development Banks and other DFIs, such as the ADB, AfDB, EBRD, IDB-Invest, IFC and FMO.

ILX, co-founded by Cardano Development, provides institutional investors access to private credit investment opportunities in the global development finance asset class, directly targeting sustainable development and climate finance projects across the global emerging markets.

ILX has established the first commercial emerging market private credit fund, ILX Fund I. The Fund fills a gap and addresses the critical need for additional long-term investment in SDG and Climate Finance projects across emerging markets. Currently, available investment capacity falls short of the required volumes due to lack of cross border private investment flows, both in the banking sector and capital markets. ILX provides institutional investors global access to the impact focused MDB, DFI loan market through an efficient fund structure, mobilising private sector capital at scale.

A number of key donors have played a critical role in the creation of ILX by supporting the development and incubation phase of the Fund. These are the German Kreditanstalt für Wiederaufbau (KfW), on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the Netherland’s Ministry of Foreign Affairs and theUK Foreign Commonwealth and Development Office (FCDO)”. They strongly support the ambition of ILX to play a catalytic role in mobilising private institutional investment for the SDGs and the Climate Finance commitments.

Institutional investors are also increasingly mandated to align their investment strategies and policies with the SDGs and Climate Finance objectives. The ILX strategy provides a well-diversified and scalable investment opportunity that is well-aligned with the sustainability objectives and reporting requirements of leading institutional investors such as APG. Additionally, ILX and Cardano Development have long-standing relationships with the MDBs and DFIs, with whom ILX will co-invest and a broad network of European institutional investors that can potentially invest in the second close
of ILX Fund I. The target fund size is USD 1 billion.

An investment in ILX Fund I provides institutional investors with a unique opportunity to access and invest in a diversified portfolio of MDB/DFI originated loans across the global emerging market sectors and regions. ILX is in a strong position to source, select, manage and report on these loan investments with high SDG and Climate Finance impact. ILX Fund will invest in syndicated loans offered by leading MDB/DFIs with whom ILX has well-developed, long-standing relationships and provide investors with access to this network of DFIs. ILX’s diversification strategy will provide market-based returns and deliver positive SDG impact with high consideration for Climate Change adaption and mitigation across the emerging markets.

Dr. Jan Martin Witte, Head of Department Global Equity and Funds, KfW Development Bank: “The ILX SDG targeted emerging market private credit Fund is an important innovation in the growing global impact investment market, providing an innovative conduit for leveraging private capital for the financing of the SDGs and the Paris Climate Agenda. KfW is proud to have played a role in nurturing this new initiative to fruition.”

Kitty van der Heijden, Director-General for International Cooperation, Dutch Ministry of Foreign Affairs: “I greatly welcome the commitment made by APG in ILX. Developing and emerging economies are furthest behind in achieving the SDGs and need to integrate the global climate commitments in their development pathways. More institutional and private capital needs to be mobilized for them to succeed. ILX innovates by leveraging the long-standing track record of development banks such as EBRD, IFC and FMO, thereby enabling pension funds to invest and achieve development impact. Moreover, this is done without the use of risk sharing instruments, which is important for generating private finance for the SDG and climate agendas in a sustainable way. I congratulate ILX, and all parties involved, with this promising solution to serve the global poor through enhanced investment.”

Rachel Turner, Director – International Finance UK Foreign, Commonwealth & Development Office: “The UK FCDO is delighted to have supported bringing this ground-breaking new initiative to completion. COP26 in Glasgow made clear that new ambitious partnerships between capital markets and development finance institutions are needed if we are to mobilise at the scale needed to support developing countries to finance their climate transitions and deliver the SDGs. We congratulate ILX on the launch of the Fund – hot on the heels of the commitments made at Glasgow.”

Joost Zuidberg, Chief Executive Officer, Cardano Development: “As we have a deep-rooted relationship with most MDBs and DFIs, that are clients and investors of Cardano Development’s various initiatives, we were in a unique position to see the high potential to establish a company like ILX to support global institutional investors, MDBs and DFIs to make significant allocations in emerging markets. ILX closes the enormous financing gap that exists between the investment requirements across the emerging markets and institutional investor’s appetite to invest in projects and companies with tangible SDG results and sound climate mitigation and adaptation strategies. We would like to sincerely thank the donors who provided the critical support that enabled the creation of ILX, namely, the German Kreditanstalt für Wiederaufbau (KfW), one of the world’s leading promotional banks, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the Netherland’s Ministry of Foreign Affairs and the Foreign Commonwealth and Development Office”.

Manfred Schepers, co-founder and Chief Executive Officer, ILX: “We are delighted that APG has made this strategic commitment as the fund’s cornerstone investor, demonstrating their strong support for this SDG-focused emerging market private credit asset class that matches both their return and sustainability objectives. We look forward to our long-term partnership with APG and to working closely with the global MDB and DFI community, which are recognised leaders in direct SDG and climate-finance investments across emerging markets. All ILX stakeholders are immensely grateful for the patient and critical donor support we have received since ILX’s inception in 2017”.

About ILX Management: ILX Management B.V. is the Amsterdam-based manager of ILX Fund I, an emerging market focused private credit fund that invests in loan participations originated and structured by Multilateral Development Banks and other Development Finance Institutions (DFI). ILX aims to create large scale investment opportunities in global development finance that directly contribute to sustainable development across emerging markets. www.ilxfund.com

About Cardano Development: Cardano Development (CD) is an incubator and fund manager, established in 2007. Through careful risk-management analysis in data-poor settings, CD identifies scalable solutions that help to make frontier financial markets more inclusive, investible, and sustainable to unlock lasting economic value. CD creates solutions for local currency, credit, and liquidity risks in these markets. With over USD 6 billion assets and USD 1.5 billion capital under management, CD supports its scale-up funds and a number of start-ups with ongoing management services, financial support and corporate governance oversight. Cardano Development works with reputable partners, including foundations, governments, impact investors, institutional investors and commercial partners. www.cardanodevelopment.com

About KfW Development Bank: KfW Development Bank is a leading development bank committed to improving economic, social and environmental living conditions across the globe on behalf of the Federal Republic of Germany and the federal states. KfW is a founding shareholder of TCX and one of its largest shareholders. www.kfw-entwicklungsbank.de

About BMZ: The Federal Ministry for Economic Cooperation and Development (bmz.de) (www.bmz.de) is the German Federal Ministry for Economic Cooperation and Development. The BMZ is one of the core contributors to TCX and supports TCX as part of the BMZ’s global SDG strategy and the Paris Climate Agenda.

About Dutch Ministry of Foreign Affairs: The Dutch Ministry of Foreign Affairs coordinates and carries out Dutch foreign policy, including development cooperation. The Minister for Foreign Trade and Development Cooperation is responsible for Dutch development cooperation policy, that focuses on poverty eradication, sustainable economic development, climate action, and conflict prevention and peace building. Developing private markets and catalyzing private investments is part of this policy, aiming to reach the SDG’s and climate goals.

About FCDO: The UK’s Foreign, Commonwealth & Development Office pursues our national interests and projects the UK as a force for good in the world. We promote the interests of British citizens, safeguard the UK’s security, defend our values, reduce poverty and tackle global challenges with our international partners.

For further information, please contact:

Cardano Development
Maria-Pia Kelly
Communications Manager
[email protected]
M +31 (0) 682 825 139

ILX Management
Mark Beers
Media Relations
[email protected]
M +31 (0)6 37 231 292

FSD Africa Investments (FSDAi), the investing arm of FSD Africa, has today announced a £3m investment into IMFact, an expanding fintech company that uses supply chain financing to provide working capital to micro, small and medium enterprises (MSMEs).

As a “pooled receivables” factoring business, IMFact purchases bulk invoices from MSMEs for a mix of upfront cash and deferred payments. This gives the sellers access to cash without the need to follow up or wait for invoices to be paid, freeing up capital to buy new inventory, pay suppliers, and grow the business.

IMFact’s “pooled receivables” model differs from the pre-existing invoice discounting practice where the best receivables or invoices are cherry-picked by the financing company meaning the rest of the receivables pool cannot be used as collateral. It also provides faster access to working capital than the invoice discounting usually offered by banks because it does not require an upfront deposit or guarantees.

FSDAi’s funding, the first external equity investment in IMFact, comes at a critical time, with Covid-19 having placed undue pressure on MSMEs in many sectors, most notably in the healthcare sector. IMFact’s innovative solution is particularly timely owing to its ability to release additional cashflow that hitherto was locked up.

Under current plans, and subject to further fundraising, IMFact is projected to provide funding totalling £475m to around 570 business over the next five years and support around 5,600 jobs.

Many of the MSMEs expected to benefit are family-owned businesses including those that distribute medical equipment and pharmaceuticals to public and private organisations. However, IMFact will also be working with supply chain businesses in other industries.

Among the first to partner with IMFact is ABC Pharmacy Ltd, which supplies pharmaceutical products to pharmacies, hospitals, and clinics across the country but had faced challenges due to inadequate working capital.

Through IMFact’s financing, ABC Pharmacy is now making a transition in its business model by extending its credit terms to clients. With the increase in capital available the company has been able to increase sales and grow its business. Dr John Muturi, CEO of ABC Pharmacy said: “The financing from IMFact will be a game changer for our future business operations.”

FSDAi’s ultimate objective in making the investment is to encourage the development of technology-enabled, “pooled receivables” financing across Africa. Our analysis shows Africa lags behind global averages for this kind of financing representing less than 1% of global volumes. On the continent, only South Africa has a markedly developed factoring model while the penetration in Kenya stands at less than 2%.

IMFact was established in 2019 by Cardano Development (CD), an incubator and fund manager based in Amsterdam, The Netherlands, with financing from KfW on behalf of the German Ministry for Economic Cooperation and Development (BMZ).  It received initial capital from Rockefeller Foundation and Convergence. IMFact Kenya is the first regional hub to become operational and was developed by CD with funding support from Total Impact Capital Advisors (TIC).

Jane Marriott, the British High Commissioner to Kenya, said: “Building back from COVID-19, boosting Kenya’s status as a hub for financial services, and creating jobs, are at the core of the UK’s Strategic Partnership with Kenya. We’re pleased to support this investment by FSDAi into IMFact, which will support SMEs in Kenya to build back from the challenges of the pandemic.”

Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments, said: “We are pleased to be working with IMFact to support the rapid financing of MSMEs in Kenya at a time when many are stuggling to get access to working capital from traditional lending institutions.  We particularly look forward to seeing the impact the investment has on Kenya’s medical and pharmaceutical sector and hope to encourage further scaling of fintech solutions to solve the funding gap among smaller businesses.”

Peter Fiala, Chief Investment Officer, IMFact said: “IMFact is extremely pleased to have passed the extensive scrutiny of FSDAi’s due diligence process which has paved the way for them to become a cornerstone investor in IMFact following the successful financial close of our third-round capital raise. This investment paves the way for further capital investors, including debt, which will support further deployment of capital to our fast-growing list of clients.”

Joost Zuidberg, Chief Executive Officer, Cardano Development, said: “We are delighted to welcome FSDAi into IMFact in support of our early growth in Kenya and expansion to other African markets. We are passionate about financial services innovation, and believe that IMFact will prove to be a step-change in broad access for Africa’s MSMEs to working capital. With its innovative approach in using the pooling of debtors to mitigate risk. IMFact has a very competitive product that directly addresses the barriers for Africa’s MSMEs to access formal and affordable finance.”

For more information, please contact:

FSD Africa Investments

Angellah Khamala

Manager, Content and Communications

Email: [email protected]