Sun King, the global leader in off-grid solar energy, has closed a $156 million (KES 20.1 billion) local currency securitisation, the largest of its kind in Sub-Saharan Africa outside South Africa.
This deal, primarily backed by commercial banks, showcases how innovative financial structures can drive affordable solar energy access for 1.4 million low-income households and businesses in Kenya.
Sun King’s PAYG Model: Fintech Meets Energy Access
Founded in 2007 as Greenlight Planet, Sun King has transformed energy financing through its pay-as-you-go (PAYG) model.
By allowing customers to pay for solar products in small daily installments, starting at just $0.19 (KES 25) via mobile money, Sun King has made clean energy accessible to 10 million customers across Africa.
In Kenya, 30% of households already use Sun King products, and this new funding will significantly expand that reach.
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How the PAYG Model Works
- Micro-Payments: Customers make affordable, mobile-based payments, eliminating high upfront costs.
- Scalable Financing: Sun King has disbursed $1.3 billion in solar loans, leveraging fintech to deliver last-mile energy solutions.
- Diverse Offerings: From solar lanterns to multi-kilowatt systems, the model supports a range of energy needs.
Breaking Down the $156M Securitisation
This landmark securitisation, arranged by Citi with Stanbic Bank Kenya Ltd as the placement agent, is a fintech milestone, marking the first majority commercial-bank-backed securitisation in Sub-Saharan Africa outside South Africa.
The deal’s structure highlights the power of local capital in driving inclusive financial solutions:
- Senior Tranche ($125M): Funded by five major commercial banks, including Absa Bank Kenya, Citi, The Co-operative Bank of Kenya, KCB Bank Kenya, and Stanbic Bank.
- Mezzanine Tranche ($31M): Supported by development finance institutions, including British International Investment (BII), Dutch development bank FMO, and Norfund.
The funds will enable Sun King to finance 1.4 million solar products and smartphones, building on their 2023 $130M securitisation.
Combined, these deals will support 3.7 million solar products in Kenya, with total securitisation capital reaching $286 million.
Why This Matters for Fintech
Sun King’s securitisation is a game-changer for Africa’s fintech ecosystem, demonstrating how financial innovation can address pressing social challenges. Here’s why it stands out:
1. Local Currency Financing
By raising over $450 million equivalent across Kenya, Nigeria, and Tanzania in local currency, Sun King mitigates foreign exchange risks, making financing more affordable for consumers and strengthening domestic capital markets.
2. Commercial Bank Confidence
The majority backing from local commercial banks signals a shift in Africa’s financial sector, with institutions recognising the viability of PAYG models. This reduces reliance on external capital and sets a precedent for future fintech investments.
3. Scalable Social Impact
The securitisation will empower 1.4 million Kenyan households and businesses with clean energy, aligning with the World Bank and African Development Bank’s Mission 300 initiative to connect 300 million Africans to electricity by 2030.
4. Fintech Innovation
By converting future customer repayments into investable assets, Sun King’s model unlocks long-term debt financing, offering a blueprint for other fintech-driven sectors like microfinance and edtech.
Sun King’s Fintech Leadership
Sun King’s success lies in its ability to blend fintech with social good. Key differentiators include:
- Massive Scale: With operations in 40+ countries and 82 million lives impacted, Sun King is a global leader in energy fintech.
- Proven Track Record: The company has raised $286 million through securitisations in Kenya alone, showcasing a scalable and sustainable model.
- Customer-Centric Design: Mobile money integration and flexible payments ensure accessibility for low-income communities.
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The Future of Fintech and Energy Access
This $156M deal positions Sun King to accelerate its mission of powering the 1.8 billion people worldwide without reliable electricity. Future initiatives include:
- Product Expansion: Introducing larger solar systems and potentially bundling smartphones to enhance connectivity.
- Market Growth: Deepening penetration in Kenya and expanding to new African and Asian markets.
- Fintech Innovation: Pioneering new financing models to drive inclusive growth across sectors.
This deal is a call to action for Africa’s financial sector to invest in solutions that empower communities and drive sustainable growth.
Ronnie Paul is a seasoned writer and analyst with a prolific portfolio of over 1,000 published articles, specialising in fintech, cryptocurrency, climate change, and digital finance at Africa Digest News.
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