SunFunder through its Solar Energy Transformation Fund, has acted as a lead arranger in a $11m syndicated debt facility to SunCulture, a solar irrigation company headquartered in Nairobi, Kenya.
SunFunder arranged as well as invested in the facility, leading a group of lenders comprising Triodos Investment Management, Nordic Development Fund, AlphaMundi and the AfDB’s Off-Grid Energy Access Fund managed by Lion’s Head Global Partners.
“We are delighted to have led this syndicate of proactive lenders who worked well together for a common goal: to help SunCulture reach many more farmers,” said Jemimah Kwakye-Fosu, Investment Officer, who led the transaction for SunFunder.
“It shows how working capital can be combined with end user financing, which is essential for making productive use technologies affordable.”
The syndicated debt facility is ground-breaking for the ‘productive use’ solar sector due to its size and its innovative combination of working capital and end-user financing.
This will enable SunCulture to scale up renewable energy installations at smallholder farms and households, which will mitigate over 20,000 tonnes of CO2 annually as farmers replace diesel pumps with solar ones whilst facilitating income growth and job opportunities in rural communities.
SunCulture offers productive off-grid solar use for smallholder farmers. Its flagship products are high-quality yet affordable solar irrigation pumps that can pump water from as deep as 100 meters to use for crop irrigation and livestock rearing, as well as domestic uses.
Through SunCulture’s Pay-As-You-Grow facility, it becomes easier for farmers to purchase SunCulture’s products through an innovative leasing scheme.
A recent report by Dalberg shows that irrigation systems and solar-powered water pumps can increase farmers’ production between two and four times, and their income between two and six times.
“The past year was devastating for the millions of smallholder farmers in Kenya; 87% are in a worse financial position due to the pandemic. 81% of SunCulture farmers, however, were able to increase their revenue from farming in 2020. Solar irrigation helps create food security and sovereignty, and it also helps lift people out of poverty,” said Samir Ibrahim, CEO at SunCulture.
SunFunder is passionate about tailoring the right financing structures to help innovative companies grow and secure additional capital from like-minded investors, according to Surabhi Mathur Visser, Head of Investments at SunFunder.
“New approaches in new sectors like this require proactive partnerships, including with Power Africa on some of the additional transaction costs of pioneering new financing structures,” he said.
“This is a pioneering transaction that demonstrates how productive use technologies like solar irrigation can be scaled up. SunFunder arranged this facility with a similar-minded group of lenders to support an innovative product and business model. We look forward to seeing SunCulture grow in Kenya and new markets,” he added.