A pioneering bond transaction sponsored by Senelec, Senegal’s national power utility, to finance 585MW of solar power generation and 329MW of battery energy storage system. This will enable reliable energy access for 1.8 million people and avoid an estimated 853k tCO2e annually.
We had an existing relationship with BOAD Titrisation (subsidiary of the West African Development Bank), which arranged and managed the bond. They had funded previous deals with local and regional investors but wanted to expand their investor base to European institutional investors, which would have required a guarantee to sufficiently de-risk the deal for such investors.
This deal aligned perfectly with our mandate given its energy transition objectives for Senegal as an emerging market and the scale of expected sustainable development impact.
In financial terms, this is a huge deal. It also marked the first African issuance of a public utility entity to obtain a dual label (Green Bond and Sustainability-Linked Bond) and one of the first securitisation deals by an African public utility. It therefore has laid the foundations for the development of the green finance market and will mobilise private capital flows into the region by providing a replicable template with demonstratable impact.
Given the various jurisdictions of the parties involved, there were multiple legal and regulatory frameworks to navigate, with different securitisation and bond issuance requirements. The bond was denominated in the local currency, West African CFA francs (XOF), which is pegged to, but also distinct from, Euros in which the investors were operating, adding further complexity.
Is the transaction replicable? How?
The structure of this transaction was complex but built upon our established ways of working with M&G Investments and Symbiotics, which provided the investment vehicle for the deal as they had done for our earlier partnership in Cote d’Ivoire with Valency International.
It now stands as a highly replicable model to engage offshore institutional investors for future deals, as proven by a deal that followed a couple of months later with Robust International in Nigeria.
There are many utilities and corporates in West Africa that could benefit from securitising their assets to fund their expansion and energy transition, as Senelec did in this deal.
We were focused on the strategic aspects of the deal for a long time, but actually, there were a lot of practicalities to consider, again linked to working across jurisdictions and currencies, which we could have addressed sooner to expedite the deal. A lesson learned for next time.
