Powering the continent through a sustainable approach

Powering the continent through a

sustainable approach

Rentia van Tonder

Head: Power

Corporate and Investment Banking

Standard Bank

November 2019

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• Universal bank

• Established in 1862

• Africa’s top bank (by Tier 1 capital) in the annual ranking of

1,000 banks globally – ranked 116 and only African bank in

top 150 – The Banker

• Headquartered in Johannesburg, South Africa

• ICBC, the largest bank in China, is a 20.1% shareholder in

Standard Bank

• ICBC is currently ranked No.1 in The Banker’s annual

ranking of the top 1,000 banks global

• Representation in major financial centres, including

London, New York and Beijing

Africa is our calling card!

Introduction to Standard Bank

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Country

Standard Bank

branches*

ATMs

Corporate

Banking

Retail

Banking

Investor

Services

Investment

Banking

South Africa 632 7,636 ✔ ✔ ✔ ✔

Angola 27 31 ✔ ✔ ✔

Botswana 11 26 ✔ ✔ ✔ ✔

Côte d’Ivoire - - - - - ✔

DRC 5 - ✔ ✔

Ethiopia - - - - - -

Ghana 34 67 ✔ ✔ ✔ ✔

Kenya 24 43 ✔ ✔ ✔ ✔

Lesotho 17 77 ✔ ✔ ✔

Malawi 25 64 ✔ ✔ ✔ ✔

Mauritius 1 - ✔

Private

clients

✔ ✔

Mozambique 42 93 ✔ ✔ ✔ ✔

Namibia 47 166 ✔ ✔ ✔ ✔

Nigeria 179 390 ✔ ✔ ✔ ✔

South Sudan 1 1 ✔ ✔ ✔

Swaziland 10 62 ✔ ✔ ✔ ✔

Tanzania 10 33 ✔ ✔ ✔ ✔

Uganda 94 174 ✔ ✔ ✔ ✔

Zambia 22 82 ✔ ✔ ✔ ✔

Zimbabwe 19 27 ✔ ✔ ✔ ✔

TOTAL 1,200 8,972 ✔ ✔ ✔ ✔

* Includes service centers and access banking centers

Standard Bank

Stanbic Bank

Stanbic IBTC Bank

Representative office

Ghana

Nigeria

South

Sudan

Kenya

DRC

Angola

Namibia

South

Africa

Lesotho

Swaziland

Mauritius

Botswana

Zambia

Zimbabwe

Mozambique

Malawi

Tanzania

Uganda

Côte

d’Ivoire

Ethiopia

Introduction to Standard Bank (Contd…)

Local on-the-ground expertise supported by a strong retail presence

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Global themes

Africa-specific themes

General

Banking regulation

• Basel Regulation has fundamentally increased cost

of capital and liquidity thereby decreasing the

Commercial Banks’ ability to support long dated

financing structures

Capital enhancement products

and structures

• DFIs and ECAs more willing to provide necessary

structural support to commercial Banks to fund P&I

opportunities – particularly with regards to tenor

Power specific

Climate change

• Regulation and activism makes it increasingly

difficult for Commercial Banks to support non-

renewable technology

• Funds set up with specific green / responsible

mandate looking for investment opportunities

PPP

• Global move towards PPP with less investment

funded directly by government balance sheets

Off-grid

• Movement away from reliance on centralized

utilities to grid tied solutions and self contained

systems through a modular approach including

rural development and captive power solutions

Renewables efficiency

• Significant improvements in the cost and quality of

renewable technology, in particular solar panels,

further enhancing feasibility and attractiveness of

sector

Storage

• Rapid advances in the battery storage changing the

renewable energy proposition – sustainable cost

effective solutions will fundamentally change the

power sector

General

Significant power and

infrastructure

investment required

across Africa

• More than six hundred million people across the

continent do not have access to electricity

• Infrastructure spend required is between USD130m –

USD150m per annum and the financing deficit is

c.USD70bn per annum over the next decade

Macroeconomic

concerns limit

sovereign appetite

• Bank / investor appetite for sovereign assets is

constrained due to generally high levels of sovereign

indebtedness and low levels of growth

Policies

• Policy uncertainty and non-existance complicates ability

for investors to take long term view on many Sub-

Saharan markets

Significant appetite for

African risk from Asian

giants in particular

China

• China is the source for 21% of Africa total imports and

17% of its exports

• China policy banks have extended nearly USD100bn in

loans to Africa sovereigns

• Chinese FDI in Africa is close to USD30bn

Power specific

Off-grid

• Off grid and Captive Power Solutions increasingly a

solution to solving electrification rates and reducing

reliance on sovereigns to fund power infrastructure

• Significant improvements in the cost and quality of

renewable technology, in particular solar panels, further

enhancing feasibility and attractiveness of sector

Themes impacting the power sector

Five Ways Disruption Can Occur in the Power Sector

---WAYS---

DISRUPTION

CAN OCCUR

DISTRIBUTION

MODALITIES

FUNCTION/

EXPERIENCE

NEW

MARKETS

PRICE

Greater access

Different ways to

‘consume’ or in this

case produce the same

product

Creating new functionality

and a better experience

Expanding access to

unconventional markets

Lower prices due to

scalability

Off grid supply– power

reaching a larger,

untapped market

New power

technologies & energy

mixes

Independence from large unreliable utilitiesFocus on markets with power under-supply

Substantial reduction in

cost of renewable

energy.. Reaching a

tipping point

Captive Market

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Disruption in the energy sector is evident through four structural global trends

The Energy Revolution

1. Decarbonization

2. Digitalization

3. Decentralization

4. Energy Efficiency

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Working towards low-carbon or zero-carbon energy generation

1. Decarbonization

Challenge 1: to ensure that future global warming does not exceed 2°C by

reducing greenhouse gas emissions by 40-70% by 2050

Challenge 2: to increase the contribution made by renewables to global power

generation through the use of solar, wind and biogas.

This is all very new:

Roughly 80% of the

globally existing solar PV

capacity was installed

during the last five years

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Challenge 1: the number of smart objects will

quadruple by 2020, so energy consumption in the

future will be smart and autonomous

Challenge 2: the high-speed, expansive

development of digital technologies is

dramatically changing customer needs and uses

Working towards a digital customer offering by exploiting the technological revolution and digital transformation

2. Digitalization

Trends in technology and consumer

financing (Pay-As-You-Go) is causing

an explosion in the market in

emerging markets.

The digital utility of the future captures opportunities all along the value chain

Source: McKinsey

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but higher reliability & lower costs are achieved by interconnecting

3. Decentralization

Customer

demand

Customer

demand

Customer

demand

Customer

demand

Customer

demand

Microgrid 1

Microgrid 2

Microgrid 3

Microgrid 4

Microgrid 5

Investors

The Off-Grid landscape & key players

Individual Residential C & I

Utility Involvement

Solar Home

Systems

(“SHSs”)

Rooftop

Solar Home

System

Mini-grids

(‘MG’)

Commercial

& Industrial

(‘C&I’)

•Mini grids are classified into 4 categories where the power supplier

acts like a utility. Power usually charged by usage:

• Utility operated

• Privately operated

• Community operated

• Hybrids

•Able to handle larger loads than SHS

•Cost: $150,000 – 200,000 per MG

•Smart metering technology and grid compatibility is key

•Targeting affluent households

•Custom fit solution for detached houses

•System prices are in the region of +/- USD15 000

•Average size 4 KW

•SA is a current target market

Asset Finance Solution

< 1MW

Property Finance

1 – 5

Too big for Corporate

Solution and too small for

Structured Solution

5 -20

Project Finance /

Structured Solution

> 20

•5-2,000kW solar panels

•Target market: shopping malls,

mines, agricultural farms and

manufacturers

•Panels mounted on a large area

such as rooftop, carpark or a farm

•Main target market includes

shopping malls, mines, agricultural

farms and manufacturers

•Cost: Ranges per size of

installation e.g $2MM for a 1.3MW

installation

•Smart dual meters are key

•STORAGE

•8-200w solar panel, mounted on roof

•Main target market includes rural and peri-urban areas

•Basic system powers lights, portable radio, USB chargers

•Appliance financing e.g for TVs, fridges

•Upfront deposit + monthly or daily instalments via mobile money

•Ownership of system is after 12-36 months

•Other business models are on “no ownership” basis but on

perpetual utility model

•Cost: $200 - $600 per basic SHS

•Smart monitoring technology is key

Sub-sector

• Engie

• Enel

• Total

• Shell

Foundation

• Vulcan Impact

• Shell Foundation

• CrossBoundary

Energy

• SunFunder

• Engie

• Enel

• Shell Foundation

• E.On

• Sunfunder

• CrossBoundary

“Picking up

…Stay

Active”

“Sweet Spot”

“Watch &

See”

Utility Involvement

• East Africa

• Nigeria

Description

Current Key

Opp Countries

• South Africa

• Nigeria?

• South Africa

• Tanzania

• South Africa

• East Africa

• Nigeria

Key Players

We are prioritizing the following sectors:

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Doing more with less….

4. Energy Efficiency

➢ Advances in energy efficient products and demand side management are helping to boost distributed energy

resources. The increased electrification of heating and cooling systems using high-efficiency heat-pump

technology, the application of efficient LED lighting and appliances, and the smart charging of electric vehicles all

contribute to greater capacity and lower life-cycles costs for net-zero energy buildings and off-grid

communities.

➢ The aggregation and centralized management of distributed energy resources, sometimes referred to

as “virtual power stations” can transform zero-energy buildings and community-scale microgrids

into regional resources by providing, or freeing up, critical electrical system capacity when needed.

➢ In developing economies, these changes might allow those communities not currently connected

to a national grid to completely bypass these forms of energy services

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Client Overview

M-Kopa : USD 65 million Syndicated Receivables Based Term Loan

Stanbic Bank Involvement

◼ Stanbic Bank Kenya (“SBK”), the Kenyan affiliate of

Standard Bank Group, was appointed as Mandated Lead

Arranger to arrange the local currency equivalent of USD

65 million of receivables based financing for M-Kopa in

Kenya and Uganda

◼ The debt facility includes CDC, FMO and Norfund as part

of the lending syndicate

◼ Our role in the transaction included:

– Arranging local currency equivalent of USD40 million

of debt for M-Kopa Kenya and USD25million for M-

Kopa Uganda

– Providing local accounts

– Payment and administration agent role

◼ Other roles for the group included:

– Standard Bank of South Africa as facility agent and

security agent

– Standard Bank Isle of Man as cash collateral account

bank

◼ M-Kopa headquartered in Nairobi, Kenya is the global leader in

“pay-as-you-go” energy, leasing solar home systems to off-grid

customers on an affordable 12-month payment plan

◼ Founded in 2010, M-Kopa combines mobile money payments

with Global System for Mobile communication (“GSM”) sensor

technology to enable affordable consumer financing for solar

powered systems.

◼ To date M-Kopa has connected over 500,000 homes in East

Africa to affordable, safe and clean energy. Its predominantly

low-income customer base is accessing lighting, phone

charging, radio and TV on daily mobile money payment plans

that are less than the typical cost of kerosene

◼ M-Kopa’s equity investors include Gray Ghost Ventures (a U.S

based venture capital fund), General Investment Management

(an asset management fund founded by former U.S Vice

President Al Gore), CDC (a DFI owned by the U.K

government), among others

M-Kopa Group

2017

USD65 million

Receivables Based Term Loan

Mandated Lead Arranger/Book

Runner/Local Account Bank

First

Deal

Closed!

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Transaction Overview

Borrower M-Kopa Kenya M-Kopa Uganda

Stanbic Bank Role

Mandated Lead Arranger, Bookrunner, Local

Account Bank

Transaction Value

USD40m (LCY

equivalent)

USD25m (LCY

equivalent)

Industry Power & Infrastructure – Off Grid

Purpose

General working capital purposes based on the

borrower’s performing receivables

Facilities

Kenya

Stanbic: -

CDC: USD18m

FMO: USD11m

Norfund: USD11m

Uganda

Stanbic: USD16m

CDC: USD3m

FMO: USD3m

Norfund: USD3m

Tenor 4 years

Status CLOSED

Highlights / Key Features

◼ Key features of the transaction include:

– M-Kopa is the market leader in “pay-

as-you-go” off-grid energy

– This facility is the largest commercial

debt facility to date in the “pay-as-you-

go” off-grid energy sector

– Brought together three DFIs to fund

local currency facilities

– No capital outlay by SBG in Kenya yet

we make significant revenues

M-Kopa Group

2017

USD65 million

Receivables Based Term Loan

Mandated Lead Arranger/Book

Runner/Local Account Bank

M-Kopa : USD 65 million Syndicated Receivables Based Term Loan

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Namibia - Alten Hardap PV Project

Standard Bank was the co-mandated lead arranger and underwriter for the

transaction with Proparco. Standard Bank also provided long-dated interest

rate and currency hedges and was account and agent bank.

The facilities granted included Jibar term loan, VAT facility and Debt service

reserve facility.

The Jibar term loan was funded by Standard Bank on the back of a

guarantee from Proparco which started at 30% and stepped up to 100% at

the end of year 8 of operations

Project was funded on approximate 80:20 basis with Standard Bank Namibia

as lender of record with sub participation of Jibar term loan and Debt service

reserve facility due to currency (ZAR)

This is the first large scale IPP in Namibia. Namibia has been looking to develop

a large scale IPP since before 2010 but this is the first project to reach financial

close. The project will add 7% to Namibia’s own generation capacity and actual

MWh produced saving 120,000MWhs per year from needing to be imported

from the region. The reliance of Namibia on its neighbours for power security is

a key concern from the Government who want Namibia to be self-sufficient in

terms of energy generation given the importance to economic growth.

The project does not benefit from a government guarantee and there is no

political risk protection in the power purchase agreement. In order to assist with

these limitations without the need to procure political risk cover, Standard Bank

partnered with Proparco. Proparco was unable to lend direct due to the currency

(ZAR) and hence a hybrid guarantee structure was developed where Proparco

provides a guarantee to Standard Bank (as lender under the term loan only)

which starts at 30% and increases to 100% by the end of year 8 of operations

mitigating a number of key risks including tenor related concerns.

The project is a 37MW solar photovoltaic IPP in Mariental, Namibia with a 25

year offtake with NamPower (the Namibian power utility).

Alten Hardap was awarded preferred bidder status in December 2016 with

documentation signed in January 2018 and financial close in February 2018.

Construction is expected to be 6 months with Sterling & Wilson being the

EPC and O&M contractor.

The main Sponsor and developer is Alten Energías Renovables (Spain)

which was founded in 2006 has experience in developing, financing and

operating solar PV power plants. It owns 33MW of operational assets in

Spain and is awaiting Financial Close (“FC”) of another 467MW (Kenya,

Mexico, Nigeria and Namibia).

Alten has partnered with Sojitz for its Latin America portfolio and will be

partnering with Inspired Evolution for its African projects (including Alten).

The latter is a known sponsor in SA REIPP projects and has an active fund

size of USD90m (aiming for USD250m by end 2018) and has, under its

Evolution 1 Fund, invested in three SA REIPP plants to date

First large scale IPP in

Namibia

Standard Bank Involvement Transaction Overview

Company Overview

Highlights / Key Features

Alten Hardap PV Project

March 2018

ZAR 760 million

45 MW Solar PV Project

Mandated Lead Arranger, Underwriter & Hedge

Provider

Namibia

Project Developer Alten Renewable Energy Developments B.V.

Main Shareholders Alten, Nampower

Borrower Alten Hardap PV (Pty) Ltd

Debt Amount ZAR 760mln

Standard Bank

Role

Mandated Lead Arranger, Underwriter and Hedge Provider

Purpose

Design, construction and operation of 45 MW solar

photovoltaic projects under Power Purchase Agreement with

NamPower

Transaction Value ZAR 950mln

Tenor 15 years

Country Namibia

Deal Maker Sherrill Byrne - Sherrill.byr[email protected]

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South Africa - Wesley Bid Date 4 REIPPP Project

Standard Bank was the sole mandated lead arranger and underwriter for the

transaction. Standard Bank Also provided long-dated interest rate and currency

hedges

The facilities granted included JIBAR senior debt, VAT facility and a Debt

Service Reserve Facility

The projectof 33 MW has a 20 year Power Purchase Agreement with ESKOM

and was procured under Round 4 of the Renewable Energy Independent Power

Producers Programme (REIPPP)

Standard Bank brought FutureGrowth in as an additional lender on the senior

debt facility at financial close

The Wesley projects was one of the 27 Round 3.5 signed projects, and one of

the 4 projects that were signed with unconditional PPAs

Some of the first projects of this round to reach Financial Close

The Wesley-Ciskei project holds great significance for the Eastern Cape

Province, it is the first and only wind energy project located in a former homeland

region of the Eastern Cape, despite such regions representing almost 40% of

the Province’s landmass and being host to 60% of the Province’s population.

The primary shareholder and developer of the Wesely project is Innowind

Limited (“Innowind”)

A long term player, Innowind is a South African based integrated renewable

energy company that develops, finances, builds, owns and operates commercial

renewable energy generation facilities

InnoWind is an expert in the field of wind energy and with its French parent

company, EDF Energies Nouvelles, brings experience in cutting edge clean

energy technologies such as stealth wind turbines, solar PV and energy storage

Innowind has offices located in Cape Town and Port Elizabeth and provide

oversight services for renewable energy projects by managing the projects and

their commercial agreements to optimize returns over the project’s life cycle

The EPC and O&M contract is being fulfilled by Vestas

Standard Bank Involvement

Transaction Overview

Company Overview

Highlights / Key Features

Riverbank Wind Power Pty Ltd

(Wesley)

April 2018

ZAR 800 million

33 MW Wind Project

Mandated Lead Arranger, Underwriter & Hedge Provider

Project Developer Innowind Limited (parent company is EDF Energies Nouvelles)

Main Shareholders

Innowind (60%); Telagystix Proprietary Limitted (22.50%);

Uncedo Lwethu Winds of Change (RF) Pty Ltd (5%); Riverbank

Winds of Change BBBEE Co (RF) Pty Ltd (12.50%)

Borrower Riverbank Wind Power (RF) Pty Ltd

Debt Amount R800 mn

Standard Bank Role Mandated Lead Arranger, Underwriter and Hedge Provider

Purpose

Design, construction and operation of a 33 MW wind project

under Round 4 of REIPPP

Transaction Value R1.03 bn

Tenor Construction plus 18 years

Country South Africa

Hedged value R800 mn

Deal Maker Vincenzia Leitich – [email protected]

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South Africa - Scatec Solar Bid Date 4 REIPPP Projects

Standard Bank was the sole mandated lead arranger and underwriter for the

transaction. Standard Bank Also provided long-dated interest rate and currency

hedges

The facilities granted included both Jibar– and CPI senior debt and subordinated

debt

Additional guarantees were also issued by Standard Bank to ESKOM

The three projects totaling 258 MW has a 20 year Power Purchase Agreement

with ESKOM and was procured under Round 4 of the Renewable Energy

Independent Power Producers Programme (REIPPP)

Standard Bank brought Liberty Group, Prescient Investment Management,

Sanlam Capital Markets and Development Bank of Southern Africa in as

additional lenders into the transaction at financial close for an amount of ZAR1.9

billion across the projects

These projects were 3 of only 6 projects of the 27 Round 3.5 and Round 4

projects that were signed with unconditional PPAs

Some of the first projects of this round to reach Financial Close

Standard Bank providing CPI debt to Renewable Energy project in SA for first

time

Innovative structuring to provide long dated guarantees to Eskom

The primary shareholder and developer of the three projects are Scatec Solar

ASA

A long term player, Scatec Solar develops, builds, owns, operates and maintains

solar power plants, and already has an installation track record of 1,000 MW.

Currently, the company is producing electricity from 322 MW of solar power

plants in the Czech Republic, South Africa, Rwanda, Honduras and Jordan and

another 434 MW are under construction.

With an established global presence, the company is growing briskly with a

project backlog and pipeline of more than 1.5 GW under development in the

Americas, Africa, Asia and the Middle East. Scatec Solar is headquartered in

Oslo, Norway.

The EPC and O&M contract is being fulfilled by Scatec Solar ASA group entities

Standard Bank Involvement Transaction Overview

Company Overview

Highlights / Key Features

Scatec Solar ASA

(Sirius Solar PV, Dyasons Klip 1 & Dyasons Klip 2)

April 2018

ZAR 2.29 billion

3 x 75 MW Solar PV Projects

Mandated Lead Arranger, Underwriter & Hedge

Provider

Project Developer Scatec Solar AS

Main Shareholders

Scatec Solar AS (42%), Norfund (18%) & Black Industrialist

Investor (35%), BEEE Trust (5%)

Borrower

Sirius Solar PV Project One (RF), Dyasons Klip 1 (RF) &

Dyasons Klip 2 (RF)

Debt Amount R2,29 bn (R764m x 3)

Standard Bank Role Mandated Lead Arranger, Underwriter and Hedge Provider

Purpose

Design, construction and operation of 3 x 75 MW solar

photovoltaic projects under Round 4 of REIPPP

Transaction Value R3.68 bn

Tenor COD + 17 years

Country South Africa

Deal Maker Sherrill Byrne - Sherrill.byrne@standardbank.co.za

Thank you