Africa GreenCo’s creditworthiness – announcing a USD 27 million Guarantee Facility with GuarantCo

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Africa GreenCo Group (GreenCo) has signed a USD 27 million Guarantee Facility with GuarantCo, part of the Private Infrastructure Development Group (PIDG) to boost renewable energy in Southern Africa.

Under this Guarantee Facility, GuarantCo will issue guarantees in favour of the Independent Power Projects (IPPs) from whom GreenCo will buy power, backing GreenCo’s payment obligations to such IPPs. Given GuarantCo’s strong credit rating (Moody’s A1 and Fitch AA-), this provides significant comfort to such IPPs, and their lenders, increasing bankability and helping to attract investment in new renewable energy generation in Southern Africa. The Guarantee Facility provides for the ability to be increased to USD 50 million to support the further growth of the business.

Speaking at the signing ceremony, GreenCo’s Chief Investment Officer, Pug Bennet 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.”

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.”

The lack of creditworthy off-takers to long term power purchase agreement has been a significant impediment to effectively harnessing the enormous renewable energy potential of Southern Africa. The collaboration between GreenCo and GuarantCo will help unblock this bottleneck and support the region in meeting the increasing power demands of its growing industries and achieving its sustainable development goals.

Chris Taylor, Deputy Director, UK JETP Envoy at the UK’s 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”.

For media inquiries and further information, please contact: pug.bennet@africagreenco.com

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GreenCo – Transnet Press Release

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