Starsight Energy (Starsight), a Nigeria-based, Africa-focused solar energy provider, announced the conclusion of a competitive local currency agreement with Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF), for a 10-year, NGN8 billion refinancing of US$20 million of current debt with two development finance institutions (DFIs) invested in the energy sector in Africa.
The new facility – Starsight’s second with NIDF – replaces Starsight’s current facilities with Norfund (the Norwegian Government Investment Fund for Developing Countries) and Finnfund (the Finnish Fund for Industrial Cooperation Ltd).
Paul van Zijl, Starsight’s Group Chief Financial Officer, explains: “The DFI facilities were secured when we were a much smaller company when most funders did not show substantial interest in Starsight. Norfund and Finnfund were invaluable funders to the company in its early guise and we remain very grateful for their support to date. The logic for refinancing the US dollar debt in local currency was just too compelling to ignore”.
The increased difficulty in sourcing US dollars in Nigeria, together with the devaluation of the Nigerian Naira in the parallel market over the past five years, has made US dollar debt increasingly expensive, van Zijl adds.
Starsight’s objectives in securing the Nigerian refinancing have been met successfully:
- removal of currency mismatch and associated foreign exchange (FX) volatility from its Nigerian business;
- reduction of its cost of debt in local currency terms; and
- an increase in its debt tenor with favourable debt covenants.
The Nigerian refinancing, negotiated in just two months amid substantial interest from Nigerian debt-funders, “keeps things local”, says van Zijl, supporting Nigerian green energy players and the country’s economy. The refinancing was made possible through close collaboration by the Starsight and NIDF teams with the necessary flexibility to ensure closing on the targeted date.
van Zijl adds: “As we continue to expand in Africa, we closely monitor the local economic situation and currency trends, ensuring our capital structure and FX exposure is optimal for that specific market.”
“The Nigerian economy has some similarities to that of South Africa – local currency income and local currency expenses necessitate local currency debt.”
About Starsight Energy:
Starsight is an unlisted provider of solar energy to governments, utilities and businesses in Africa. Starsight is backed by Helios Investment Partners, which manages geographically diversified portfolios of private equity and credit investments in more than 30 African countries; and African Infrastructure and Investment Managers (AIIM), a member of Old Mutual Alternative Investments, which manages investments in East, West and Southern Africa, with US$2.4 billion equity under management and a track record across seven African infrastructure funds.
Technology-driven Starsight offers the provision of clean, green energy, end-to-end services – from planning to construction, to operational management, wind-down and re-deployment – with no upfront capital investment to investors, plus significant energy savings. For more information: www.starsightenergy.com
About Chapel Hill Denham Nigeria Infrastructure Debt Fund:
Nigeria Infrastructure Debt Fund is Nigeria’s largest and Africa’s first-ever listed infrastructure fund, providing long-term, Naira-denominated financing for infrastructure projects in Nigeria. NIDF enables project sponsors to avoid the unsustainable mismatches of currency and tenor between their financing and their revenues/cash flows.
NIDF’s investor base includes the African Development Bank (AfDB), Nigeria Sovereign Investment Authority (NSIA) and nearly all the pension funds operating in Nigeria. For more information: www.chapelhilldenham.com