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

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.

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.”

Photo supplied by GuarantCo:

[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.