EBRD to contribute $130 mln to Egypt's private energy sector green bond issuance, out of total $340 mln

Doaa A.Moneim , Monday 24 Jan 2022


The European Bank for Reconstruction and Development (EBRD) will dedicate a total of $130 million for green bond issuance in Egypt’s private energy sector to be the first private green renewables-backed bond issued in the Egyptian market, according to the bank’s website.

The issuance is for Scatec SOLAR ASA, a leading renewable power producer headquartered in Oslo, Norway, and listed on the Oslo Stock Exchange.

The issuance totals $340 million, according to the EBRD.

Scatec develops, builds, owns, and operates solar, wind, and hydro power plants and storage solutions, and has more than 3.5 GW in operation and under construction on four continents.

The Benban projects are ultimately owned 51 percent by Scatec, 25 percent by Africa 50, and 24 percent by Norfund, according to the EBRD.

Africa 50 is an investment vehicle established to help bridge Africa's infrastructure funding gap by facilitating project development, mobilising public and private sector finance, and investing in infrastructure on the continent.

Norfund is the Norwegian Investment Fund for developing countries, owned and funded by the Norwegian government. Its role is to assist in building sustainable businesses and industries in developing countries by providing equity capital and other risk capital.

EBRD’s participation will include $100 million in the form of a direct subscription in the bond, and the provision of $30 million stand-by liquidity facility for the benefit of the participating private institutional investors.

EBRD said that the bond’s proceeds are expected to be utilised to support a portfolio of six operational solar power plants in Egypt’s Benban site.

Being the first private sector entity to take such an action, the Commercial International Bank (CIB) issued its first green bond in the Egyptian market in June 2021 with a total value of $100 million.

The tenor of the issue is five years. Proceeds will be used to fund a portfolio of green loans extended by the CIB to its corporate as well as small and medium-enterprises (SMEs), with an aim of funding the CIB's green building capital expenditure for up to 20 percent of the proceeds.

The International Finance Corporation (IFC), a member of the World Bank Group, was assigned as the subscriber to the full value of the issuance.

On a sovereign level, Egypt issued its first of a kind green bond in 2020 in the local and international market as well through offering it in the London Stock Exchange Bourse (LSE) with a gross value of $750 million.

The bond proceeds are set to be used in financing eco-friendly green projects, achieving the country’s sustainable development plans in clean transport, renewable energy, reducing population, adapting to climate change, uplifting energy efficiency, in addition to applying sustainable development protocols to water resources and sanitation in light of Egypt’s Vision 2030.

The bond managed to attract 16 new investors from Europe, the US, East Asia, and the Middle East with 47 percent, 41 percent, six percent, and six percent, respectively.

Egypt plans to kick off a second issuance of green bonds in 2022 ramp up its first-ever Islamic bonds (sukuk) issuance.

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