US firm Renewvia launched Renewvia Energy Africa Holding and seeks to raise $350 million in five years.
Renewvia’s CEO, Trey Jarrard, said, “Our goal is to install 1,000 off-grid solar power systems over the next five years in Nigeria and Kenya. To make this happen, the company is implementing an aggressive strategy which also involves capital markets: in five years, we hope to raise $350m via equity and including a debt component as well.”
Until now, Renewvia had a project-by-project financing strategy, but going forward it wil establish a holding company named Renewvia Energy Africa Holding which will consolidate the group’s capital and business activities on the continent. The upcoming funding round is expected to raise somewhere between $5 and $10m and Mr Jarrard hopes that it will eventually trigger exponential growth.
The CEO is looking to take advantage of regulatory incentives implemented in Nigeria byt he World Bank, with the backing of the Rural Electrification Agency,under which energy operators are granted subsidies based on their performance. Kenya also has a programme providing individual, per-project subsidies. Both countries protect investors by granting a 20-year exclusivity period for the operation of energy installations, Mr Jarrard explained.
According to Renewvia, the off-grid solar power market in Africa is a market for the taking, a fact that has fuelled the company’s ambitions: “It’s a small market with few players. A lot of companies aren’t able to obtain financing,” said the CEO, who founded Renewvia in 2008.
The partnership agreement signed with Dream Projects Incubator (DPI), which will make acapital investment in Renewvia, should accelerate the growth trend. DPI is headed by Kazuomi Kaneto, the founder of Pacifico Energy, a Japanese renewable energy company which has developeed over 1,300 MW utility scale projects since 2012. DPI, so far active in the industrial solar powersector and keen to position itself in sub-Saharan Africa’s off-grid solar power market, will also help Renewvia reduce its costs via less expensive equipment purchases. A special purpose vehicle localised in Mauritius has been set up to direct the Singaporean entity’s investments to the various subsidiaries.
The two companies have formed a special purpose entity to capitalize large portfolios of solar microgrid projects in sub-Saharan Africa, making them well-positioned to efficiently develop thousands of microgrids across the region. The first 10 projects are partially capitalized with the French Development Bank and The World Bank.
The French Development Agency and the German Corporation for International Cooperation (GIZ) have already solicited Renewvia for several projects. The firm was contacted by the French agency for six projects, for which it had a mandate but it struggled to attract private sector players. Renewvia generated on a recent project, as for example, an EBITDA of $290,000, for aninvestment of $1.75m.
Renewvia is potentially interested in West Africa (Benin, Ghana and Liberia are being targeted) and in Rwanda and Uganda, two countries where the company already operates, in the long term, but it is “only considering proposals” for the time being.
Renewvia is working with Nigeria-based firm Detail Commercial Solicitors and its Partner Dolapo Kukoyi. In Kenya, it is using the services of Musyoka Murambi & Associates,with Managing Partner Albert Simiyu Murambi serving as its main contact.