Fund linked to former US vice president buys shares in fintech firm M-Kopa

M-KOPA Solar CEO and co-founder Jesse Moore. FILE PHOTO | NMG

Four foreign funds, including one co-owned by former US vice-president Al Gore and the UK government’s investment arm CDC, have bought an estimated 40 percent stake in venture capital fintech M-Kopa for an undisclosed value through a debt swap deal.

Generation Investment Management, which was co-founded by Mr Gore, CDC and LGT Lightrock – a private equity fund backed by Liechtenstein’s royal family – will take a combined 36.04 per cent stake to convert its loans in M-Kopa into shares, people who is familiar with the agreement.

LR Africa Holdings Limited will purchase less than a five percent stake in the company which currently has over 40 owners, including GIM CSF II (Cayman), Adolf H Lundin Charitable Foundation, Gray Ghost Doen Social Ventures Cooperatief Ua, Sumitomo Corporation and Erick Donasian.

M-Kopa has raised billions of shillings for expansion, including $75 million (Sh8.5 billion) in March this year. Three of the four foreign funds offered part of the cash.

Yesterday, the Competition Authority of Kenya (CAK) approved the M-Kopa deal as the firm seeks to go beyond asset financing to include health insurance, cash loans and buy-now-pay-later trading partnerships.

“The proposed transaction involves the conversion to equity of certain convertible loan notes (debt) issued by the target to the acquirers and the change and recapitalization of the target’s share capital. This will result in a change of control in the target,” CAK said.

M-Kopa has raised $22.8 billion ($190 million) from investors in over 16 rounds over the years to expand its asset financing business that allows customers to pay for green energy products in installments.

M-Kopa started in 2011 as a retailer of solar-powered electrical equipment. It has also partnered with companies such as Safaricom’s to offer Internet-enabled phones under the ‘lipa mdogo mdogo’ concept and electric mobility companies Roam and Arc Ride that offer two- and three-wheeled electric scooters and bicycles through flexible financing terms.

Several off-grid solar start-ups are flocking to Kenya’s rural areas offering pay-as-you-go kits in a race to claim customers who lack reliable access to electricity.

M-Kopa’s competitors include PAYGO capital financing companies such as Solar Panda, D.Light, Greenlight Planet, Aspira, Bboxx, Azuri, Biolite, Daima Energy, Delta Energy Systems Ltd, Kensen, Mobisol, PowerGen, Solargen, Sunking, Suntech, ZilanSolar, Thrivesolar , Ofgen, Strauss Energy and ORB Energy.

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