How Crossboundary Energy raised $40m to grow C&I solar projects in Africa
Crossboundary Energy (CBE), a renewable energy company committed to providing solar solutions to commercial and industrial (C&I) customers in Nigeria and other African countries has just carried out a new financial mobilisation which made it possible to raise $40 million in its first fund, a development that will allow the company continues its development across the continent.
The funds which are invested by ARCH Emerging Markets Partners’ Africa Renewable Power Fund (ARCH ARPF) will have a 15percent net internal rate of return (IRR), a metric used in financial analysis to estimate the profitability of potential investments.
“We’re very excited to work with ARCH ARPF to continue providing Africa’s leading businesses with cheaper, cleaner, more reliable power at no upfront cost,” Pieter Joubert, chief investment officer at Crossboundary Energy said in a press statement.
ARCH ARPF’S interest in renewable energy is not new, as the fund is scouting for investment opportunities in the very dynamic clean energy sector in sub-saharan Africa. A few weeks ago, the Mauritius-based investment fund invested $3 million in Sun Exchange, a peer-to-peer solar leasing platform.
The fund is always searching for opportunities in subSaharan Africa’s growing clean energy sector.
Joubert noted that this commitment by ARCH ARPF represents the next phase of Crossboundary Energy’s larger $100 million transactions which will allow the firm to take the C&I sector to scale across Africa, and in doing so, further reduce energy costs for our customers, create additional jobs within the solar sector, and significantly reduce carbon emissions.
CBE1 was closed in November 2015 as Africa’s first dedicated fund for C&I solar. It was also a prototype for a new blended finance approach to renewables in Africa.
CBE’S solar-as-a-service model allows corporate customers to avoid the upfront capital expenditure and technical risk that can be a barrier to solar adoption. Instead, customers enter into long-term solar service agreements under which CBE (in partnership with local developers and solar contractors) finances, installs and operates solar assets to provide customers with cleaner and cheaper power.
USAID’S Power Africa initiative contributed $1.3m in the form of a repayable grant to catalyse private investors into the fund.
USAID’S subordinated equity contribution attracted additional equity investors, effectively resulting in leverage of matching private capital of more than 6.0x. At the close of this transaction, this leverage increased to more than 30x and USAID’S blended finance contribution of $1.3m has now been repaid to the US Treasury with a return of 5percent.
The company currently has an asset base of $57 million in eight African countries including Kenya, Rwanda, Ghana, Madagascar, Uganda, Sierra Leone, Zambia and Nigeria. Some of its solar C&I customers include Unilever, Diageo, Coca-cola distributors, Rio Tinto, Heineken, AB Inbev.
CBE is now operating or delivering $57 million in assets, serving 20 customers across eight countries in Africa, including more than 40MW of fully financed solar PV and 10MWH of battery storage projects.