Macquarie, Old Mutual reach close on Kenyan wind park

The African Infrastructure Investment Fund II (AIIF2) and Norfund, the Norwegian development finance institution, have achieved financial close on the Kinangop Wind Park (KWP) in Nairobi, Kenya.

The $150 million project involves the construction, financing, operation and maintenance of a 60.8 megawatts (MW) greenfield plant located in the Kinangop region, about 60 kilometres northwest of Nairobi. It is billed by its sponsors as the first independent, large-scale wind farm in East Africa.

The project is majority-owned by AIIF2, which is advised by African Infrastructure Investment Managers (AIIM), a joint-venture between Australia’s Macquarie Group and Cape Town-based Old Mutual Investment Group. Norfund holds the remaining shares.

Both investors joined forces with local developer Aeolus Kenya in 2012 to close the project, which is fully underwritten by CFC Stanbic, the Kenyan subsidiary of South Africa’s Standard Bank. Built by Spanish developer Iberdrola, it will comprise 38 General Electric 1.6MW wind turbines.

The power generated by KWP will be sold to the Kenya Power and Lighting Company, the national electricity utility, under a long-term purchase agreement. The project aims to start feeding electricity into the grid in the first quarter of 2015, with full commercial operations expected to begin in July 2015.

The investment is fully within the remit of AIIF2, which reached its final close on $500 million in September 2011. Its LP base includes the African Development Bank, CDC Group, FMO, International Finance Corporation, Proparco and Standard Bank.

Structured as a private-equity style infrastructure vehicle, the fund has already committed around 43 percent of its initial capital, according to the latest figures available on AIIM’s website. Its investments have mainly focused on the energy and transport sectors in Sub-Saharan Africa.

Norfund, wholly owned by Norway’s Ministry of Foreign Affairs, has also proven a particularly active investor in renewable energy, including hydro, wind and solar power. Its current portfolio totals 110 projects, worth around $1.5 billion, in Eastern and Southern Africa, Central America and South East Asia.

The Kinangop close will provide a further fillip to the nascent African renewables industry, following several landmark deals announced in recent weeks.

Endeavor Energy, a power company backed by US private equity firm Denham Capital, last month entered into an agreement with power developer JouleAfrica to jointly develop the Bumbuna Phase II Power project, a 252MW hydroelectric power plant in Sierra Leone.

In October, Ethiopia’s 120MW Ashegoda wind farm, now the largest in the whole of Africa, officially went online. It is part of a raft of green energy projects – including wind and geothermal schemes – recently launched by the country, whose stated ambition is to become carbon-neutral by 2025.