AGF supports debt funding of the largest solar power plant in Madagascar

GreenYellow, Axian, Societe Generale, GuarantCo and African Guarantee Fund close MGA 73.8 billion(EUR 16.2 million/USD 19 million) transaction to support the debt funding of the largest solar power plant in Madagascar and accelerate the country’s green energy transition

GreenYellow, an operator of green energy in Madagascar, Axian, an impact-oriented Pan-African group with holdings in various sectors and countries, Societe Generale, GuarantCo, the guarantee arm of the Private Infrastructure Development Group (PIDG) company and African Guarantee Fund have closed a MGA 73.8 billion (EUR 16.2 million/USD 19 million) transaction to support the debt funding of the 20 MW solar photovoltaic power plant in Ambatolampy. This power plant is the largest in the country and was operated and built by GreenYellow. It has been operational since 2018.

To make this transaction possible, Axian acquired 51 percent of the solar plant’s shares in June 2020. Societe Generale, acting as sole arranger and co-lender with BNI and BMOI, raised EUR 16.2 million / USD 19 million debt. GuarantCo and the African Guarantee Fund provided additional support with guarantees of MGA 36.9 billion (c. USD 9.3 million) and MGA 14.8 billion (c. USD 3.8 million) respectively.

In addition to injecting capital into the Ambatolampy solar plant, the transaction will also empower GreenYellow and AXIAN partnership to accelerate investments in new greenfield projects in Madagascar, and make them a key contributor to the country reaching its objective of an 80 percent renewable energy mix by 2030 and improving its energy security.

Madagascar’s energy mix is presently dominated by heavy fuel oil and diesel. The government-owned, vertically-integrated utility that operates most of the country’s power grid requires the private sector’s involvement to address the chronic shortage of electricital access. Private developers, such as GreenYellow and Axian, will not only expand access to renewable energy in Madagascar but they will also offer a more stable supply of energy, allowing the country to progress greatly toward the United Nations Sustainable Development Goal 7 (affordable and clean energy).

The plant is also a major contributor to the reduction of carbon emissions in Madagascar, reducing emissions by 17,000 tons of CO2 per year.

The transaction will thus help provide access to clean, affordable and reliable energy to households and companies, create local jobs and stimulate wider economic development. 

Otmane Hajji, CEO at GreenYellow, said: “With this transaction and this new partnership, GreenYellow is reinforcing its strong presence in Madagascar and in the Indian Ocean, where we are already the first producer of clean energy. The refinancing of the Ambatolampy power plant will allow GreenYellow and Axian to go further and finance the development of future renewable energy projects in Madagascar.”

Hassanein Hiridjee, CEO of Axian Group, said: “The Axian Group is proud to participate in this major project. It reaffirms our determination to providing wider access to clean and affordable energy, and to contributing to many economic and energy objectives in Madagascar all at once.”

Laurent Goutard, Head of International Retail Banking for Africa, the Mediterranean Basin & Overseas at Societe Generale, said: “Financing the renewable energies sector is one of Societe Generale group main commitments and is fully in line with “Grow with Africa”, the strategic plan for the African continent. Pulling expertise and resources from our local branch, supported by our dedicated structured finance platform in Ivory Coast, we are very proud to be the sole arranger of this transaction.”

Lasitha Perera, CEO at GuarantCo, said:“GuarantCo’s involvement will help to increase private sector activity in the Malagasy renewable energy sector by reducing the high costs of funding, contribute to creating an enabling environment for private, domestic, local currency financing and support project development. The transaction is helping to crowd in three private sector banks to lend to a solar power plant and is playing a major role in building the capacity of these local banks to finance these types of projects which is key for the development of future projects in Madagascar.”

Jules Ngankam, CEO of African Guarantee Fund, said: “Renewable energy is among the priority investment sectors of AGF. We are delighted to co-guarantee this power plant with GuarantCo and to ultimately contribute to the achievement of renewable energy mix in Madagascar. Through this partnership, we will increase our mandate in Madagascar, where we have so far unlocked USD 21 million of SME financing and created more than 1000 jobs.”