The UK government-funded Renewable Energy Performance Platform (REPP), which is managed by Camco, has chalked up another successful investment exit. REPP initially invested in mini-grid developer ARC Power in 2019 and has now recovered its investment while continuing to support the company through a partial equity conversion.
REPP’s initial convertible loan in 2019, and an additional convertible loan in 2020, has enabled ARC Power to pursue its ambitious plan to build a large portfolio of solar mini-grids in Rwanda.
The early-stage financing has proved critical in helping the British-based developer to finalize the initial phase of the project, which involved the construction of four mini-grid generation systems serving six distribution networks. These networks are now supplying electricity to 14 villages in Bugesera and Gatsibo Districts and have so far connected over 10,000 people, 153 microbusinesses and 3 critical services to electricity for the first time.
Rwanda has set a target of universal energy access by 2024, and ARC Power is currently working on a collaboration with the Government of Rwanda to accelerate progress through the construction of grid-connected mini-grids and standalone systems.
Under the exit deal, REPP has agreed to a repayment of the loans as well as a partial equity conversion. The repayment will settle ARC Power’s debt to REPP, while the equity conversion will further support ARC Power’s expansion plans in Rwanda.
Ben Hugues, Investment Director and REPP Lead at Camco, said: “When REPP first invested in ARC Power it was not without its risks, but we saw great potential in the company and its leadership. Today our faith has been rewarded, with our early-stage investments playing a critical role in crowding in additional lenders and enabling ARC Power to deliver on its phase one objectives.”
He added: “The repayment of the loans, with partial conversion of the accrued interest into equity, secures REPP’s capital and retains significant upside exposure. It also demonstrates our continued faith in the company to deliver on its impressive plans for expansion and asserting itself as one of the leading mini-grid developers in the region.”
Outside of Rwanda, ARC Power has recently secured the largest national concession to roll out mini-grids in Mozambique through its in-country partners, with construction due to start imminently on a large mini-grid in Gaza Province that will connect more than 3,000 people to electricity for the first time. The project has been made possible after ARC Power secured additional financing from an existing funder, which was mobilized as a direct result of REPP’s equity conversion and the increased confidence in the developer it has brought.
Karl Boyce, CEO of ARC Power, said: “We are very pleased to have REPP as a shareholder ahead of our next phase of growth. Having successfully delivered the first phase, ARC Power has secured a significant pipeline across four countries in East and Southern Africa, and we are now working on our Series-A to allow us to really scale in line with our vision of building a pan-African clean utility business.”