KenGen to raise $345 million in bond issue for expansion plans
Well head plant of Green Energy Group on location, Kenya (source: Green Energy Group)
Alexander Richter
25 Feb 2013
KenGen is seeking to raise $345 million in funding through use of asset-backed securities. It aims to use 20-year bonds to cover development costs for its geothermal expansion plans in Kenya.
Reported from Kenya, KenGen is seeking to raise funding of $345 million through use of asset backed securities. With KenGen set to twofold its current total capacity to 3,000 MW by 2018, the company needs up to $5 billion in the next five years to deliver sufficient power to fuel the rapidly growing demand of the country.
The company intends to use the steam, for which the company has already drilled as a collateral in the fund raising, and the capital is then to be used to build power plants. Revenues from the sale of power is then to cover costs and interests for investors.
KenGen, so its CEO Eddy Njoroge, has appointed a financial advisor to guide the company’s financial options going forward. The $345 million fund raising now is to be raised through a 20-year bond.
The Asset Backed Securities Regulations of 2007, provides that an originator can transfer an asset which has clear cash flows to a separate institution ( a special purpose vehicle, created to handle the securitization of asset backed securities) this separate entity would then issue a bond.
The cash flows from the asset would service the repayments of the bond.
Source: Coast Week/ Xinhua News
