![]() ![]() ![]() Ned Tozun, co-founder and chief executive at d.light, backed Shell as the “ideal partner” for its “next phase of major growth”. To date, d.light has deployed solar solutions in more than 70 developing countries, claiming to have benefitted more than 100 million lives in the process. In acquiring the stake, Shell is to help d.light – which develops solar power and lighting solutions in developing economies – move on to new projects in a move which the company said underscores the sector’s “increasing commercial viability”.Ī number of d.light’s early investors, including ethical investor Omidyar Partners, have been bought out by Shell under the deal, although specific financial terms have not been disclosed. We made use of our existing partnership with the US International Development Finance Corporation (DFC) and the Ford Foundation to structure a local currency facility which supports d.Shell New Energies has continued its flurry of acquisitions and investments, doubling down on the off-grid renewables market with the purchase of a minority stake in solar firm d.light. With no track record, funding is almost exclusively provided by international investors which poses complex structures and introduces tangible risks because of currency volatility against the dollar. “A key challenge for companies such as d.Light is raising finance. Directly contributes to d.light’s plan to provide one billion people across the world with sustainable energy solutions by 2030.In addition to enabling companies to scale and expand their impact, the partnership will help these ventures gain a wider array of mainstream financing options in the future. Allows for the expansion of the PayGo business into other markets in Africa.Supports d.light’s timely importing of inventory and payment to suppliers.The guarantee/support by DFC and Ford Foundation enabled Citi to offer competitive pricing to d.light. Also, there was no requirement for d.light to provide local assets as security. This working capital facility eliminates currency volatility costs and reduces the transaction complexity associated with raising an international working capital facility. In 2019, Citi Inclusive Finance, the US International Development Finance Corporation (DFC) and the Ford Foundation launched Scaling Enterprise, a US$100m loan guarantee facility, which enables Citi to provide earlier-stage financing in local currency to companies that expand access to products and services for low-income communities in emerging markets.Īware of the financing challenges d.light faced, Citi Kenya, through the Scaling Enterprises programme, extended a US$5m (local currency equivalent) working capital facility to d.light. Where capital is available, it is almost exclusively from international investors (often in the form of debt, impact equity capital, or grants) and this makes it particularly difficult for smaller companies who may lack the networks, and/or resources needed to raise capital in international markets, particularly if complex financial structures have to be developed. Banks may also perceive a significant risk that consumers will default on payment to the PAYG provider if the grid is extended to a household during the primary lease period. Pay-as-you-go (PAYG) companies such as d.light are young and often fail to meet the track record and collateral requirements set by lenders. Many investors do not understand the OGS business and are hesitant to invest. One of the main challenges d.light faced was fundraising. The World Bank Group has estimated the funding gap of the OGS market in Africa to be US$2.5bn. The industry, however, remains nascent and dynamic, populated by small and start-up companies which face similar challenges in developing scale and raising debt financing at sustainable terms. Today, the OGS industry is recognised as a critical component in the fight to eliminate energy poverty. According to the IEA Africa Outlook Report (2019), in sub-Saharan Africa alone, more than 600 million currently live without electricity and spend over US$17bn a year on inefficient and often unsafe energy. The 2020 Off-Grid Solar (OGS) Market Trends Report suggests more than 840 million people live without electricity and over one billion are connected to an unreliable grid. Founded in 2006 at Stanford University (USA), d.light now has its main hubs in Nairobi (Kenya), Gurgaon (India) and Shenzhen (China). One billion to benefit from Scaling Enterprise partnership to eliminate energy poverty Company profile d.light is a global leader and pioneer in off-grid solar solutions for low-income households that do not have access to energy. ![]()
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