June 15, 2022
Norfund invests in a new financing vehicle that is the largest off-balance-sheet financing facility of its kind in the industry, paving the way for d.light to sustainably expand its operations across Africa.
Norfund’s invests in the new facility together with the U. S. International Development Finance Corporation (DFC), responsAbility’s managed Funds, and Oikocredit.
Since 2016, Norfund has been an equity investor in d.light – one of the largest players in off-grid solar energy. Last year Norfund also joined DFC as a senior lender in the BLK1 structure, which is a local currency impact financing vehicle dedicated to providing d.light’s solar home systems business with access to on-going, flexible and sustainable receivables funding.
Flexible working capital
The new BLK2 structure is an off-balance sheet financing vehicle that provides d.light with flexible working capital, enabling the company to provide consumer financing and make its products universally available and affordable for customers, most of whom live below the poverty line and lack access to reliable power.
The facility will finance a range of products that drive quality-of-life improvements, from solar home systems to high-efficiency appliances and smartphones. BLK2 is the largest off-balance-sheet facility in the industry thus far, and comes on the heels of d.light celebrating 125 million lives impacted globally.
We are especially pleased that we through this deal are able to provide capital in local currency, to reduce borrowing costs and make it possible for d.light to give increased quality of life through solar energy to even more people.
Mark Davis, EVP Clean Energy at Norfund
BLK 2 has been structured to provide d.light with multi-currency financing up to the equivalent of USD 238 million in face value of receivables over a two-year commitment period, giving the company continued access to sustainable and affordable receivable financing for its Kenyan business with a plan to expand to other African countries in the near future.
The structure is expected to directly impact over 2.8 million lives including the over 1.9 million people with improved access to clean and modern energy who, together, will reduce over 600,000 tons of CO2 emissions.
Providing energy to millions of new households
Norfund’s newly released report on operations, shows that Norfund’s investees provided 3.5 million new households with access to electricity in 2021. The increase is mainly due to solar home systems providing energy directly to people living outside the grid.
The needs are great however. According to the IEA, the number of people without access to energy increased by 2% to 768 million in 2021, after annual declines from 1.6 billion in 2000. The increase is primarily in Africa, where the development has not kept pace with population growth following the pandemic.