M a r k e t N e w s

KenGen seeks regulatorsí nod to float bond

Posted on : Tuesday, 10th March 2015

 State power generator KenGen is looking at floating asset-backed securities to finance more than Sh80 billion in energy infrastructure over the next two years

KenGen, which has already pegged its Sh30 billion Rights Issue for the second quarter of this year needs Sh118 billion to finance its infrastructure development.
 
The firm is in talks with regulators to use asset backed securities to plug the difference. “We are considering a mixture of financing avenues and not just the Rights Issue although this (Rights Issue) is very critical for us in terms of unlocking opportunities to raise additional debt financing,” said KenGen CEO Albert Mugo.
 
“We are looking at using some of the assets such as geothermal wells and power plants to back debt securities issued through the NSE but that is an on-going discussion,” Mugo disclosed. This will be the second time the power company was using this vehicle to raise funds.
 
In 2009, KenGen raised Sh25 billion through a Public Infrastructure Bond (Pibo), part of whose proceeds have been utilised in the 280MW Olkaria and 120MW Kipevu three plants.
Mr Mugo, who was speaking at an investor briefing meeting in Nairobi yesterday, stated that KenGen was looking at additional funding options including long-term loans with Development Financing Institutions, medium term loans with local banks, bonds and asset-backed securities to supplement the rights issue.
 
KenGen requires Sh118 billion to finance five major geothermal projects by 2018. These include rehabilitation of Olkaria 1, Olkaria 1 unit 6, Olkaria V and VI with a capacity of 501MW. Mr Mugo said a number of local and international financial institutions had shown a keen interest in financing KenGen’s projects at “very reasonable interest rates.”

Source : IN 2 EAST AFRICA
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