GuarantCo provides Africa GreenCo with a USD 27 million guarantee to boost renewable energy in Southern Africa

  • Date written
  • April, 2024

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided Africa GreenCo with a USD 27 million guarantee facility to boost renewable energy in Southern Africa.

Africa GreenCo

[First row left to right] Jason Murray, Finance Director at GuarantCo; Layth Al-Falaki, CEO at GuarantCo; Cathy Oxby, Co-founder and CCO at Africa GreenCo; Pug Bennet, Co-founder and CIO at Africa GreenCo.

[Second row left to right] Christopher Taylor, Deputy Director, UK JETP Envoy at FCDO; Gail Warrander, Just Energy Transition Lead, South Africa at FCDO; Mark Barges, Partner at Ashurst; Naresh Goyal, Senior Investment Specialist at GuarantCo; Stephanie Curiel, Senior Legal Counsel at GuarantCo; Adela Mackie, Juriste at Ashurst; Tra Vu, Investment Manager at GuarantCo.

GuarantCo will issue guarantees directly to the Independent Power Projects (IPPs) from whom Africa GreenCo will buy power whilst backing the company’s payment obligations to such IPPs. This innovative guarantee structure and GuarantCo’s high credit ratings (Moody’s A1 and Fitch AA-) will provide IPPs and their lenders with the comfort to enter into contracts and build renewable power projects.

The USD 27 million guarantee is expected to enable up to USD 270 million of Private Sector Investment in IPPs which will sell energy to private off-takers and on the South Africa Power Pool (SAPP) market. Through the transaction, between 200MW and 300MW of renewable energy is expected to be brought online, providing improved electricity access to grid-tied businesses and end users (Sustainable Development Goal 7.1) whilst enabling renewable energy to avoid and reduce GHG emissions (SDG 13).

This is PIDG’s second transaction with Africa GreenCo.  Having leveraged a PIDG Technical Assistance grant in October 2020 to help operationalise GreenCo Power Services in Lusaka, InfraCo Africa invested USD 5.5 million in May 2022 to scale GreenCo’s offering as Zambia’s first renewable energy buyer and services provider.

Layth Al-Falaki, CEO at GuarantCo, said:

“We are delighted to have closed our transaction with Africa GreenCo which aligns with the PIDG 2023 – 2030 Strategy focus on climate action. Our sister PIDG company, InfraCo Africa, has supported the development and growth of Africa GreenCo’s pioneering offering since 2020. It is a good example of our strategic focus to replicate deals, executing transactions more efficiently in order to deliver the impact to local people faster.  We are very happy to provide a complimentary and innovative credit solution to support the company to further grow its business and provide financial support to solar photovoltaic projects in Southern Africa.”

Pug Bennet, CIO at Africa GreenCo, said:

“GuarantCo’s backing enhances GreenCo’s credibility in the market.  The due diligence work by the GuarantCo team has been extensive and they are to be commended in both their thoroughness and support in developing a bespoke Guarantee Facility. The guarantees that will be issued under this Guarantee Facility are a key requirement to enable GreenCo’s IPPs to reach financial close and to start construction of much needed power for the region.  The work done by GreenCo as the leading energy trader in the region is only possible with the support of our investors, IFU and InfraCo Africa, and we are grateful to GuarantCo for adding to this support through this Guarantee Facility.”

Christopher Taylor, Deputy Director, UK JETP Envoy, FCDO, said:

“This is a great example of how innovative finance can mobilise private investment in sustainable and inclusive infrastructure. This guarantee facility can support deployment of more renewables in the Southern Africa region and will also help decarbonise industry and address load shedding in South Africa as part of the Just Energy Transition. The UK’s support pledge to South Africa’s Just Energy Transition included those elements of investments by the Private Infrastructure Development Group (PIDG) to the degree to which they relate to South Africa. The UK is a majority funder of PIDG.”

NOTES TO EDITORS

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 and Sweden, through the PIDG Trust, the Netherlands, through FMO and 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. Since 2005, GuarantCo has enabling USD 6.2 billion of total investment and USD 5.2 billion of private sector investment, giving 45.2 million people improved access to infrastructure and creating around 229,000 jobs. 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 pioneering, partnership, safety, inclusivity and urgency.

PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing.

Since 2002, PIDG has supported 211 infrastructure projects to financial close, which provided an estimated 222 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 Africa GreenCo

GreenCo is a renewable energy buyer and trader operating in Southern Africa; purchasing power from renewable energy generators and selling that electricity to utilities, private sector offtakers (i.e. commercial and industrial users), national power trading markets and to the competitive markets of the Southern African Power Pool (SAPP). GreenCo is an active trader on SAPP and holds a number of applicable licenses covering its operations within the Southern African region. Through its activities, GreenCo will increase the supply of, and demand for, finance for energy projects, and mobilise private sector capital more quickly towards critical and transformative capacity addition. www.africagreenco.com