THE Capital Markets Authority (CMA) in Kenya has approved KenGen's information memorandum, giving it a green light to raise Sh15 billion through the public infrastructure bond offer (PIBO).
The power distributor's managing director, Mr Eddy Njoroge, said he was delighted the organisation had been given the go-ahead to issue the bond. "Plans are on course to bring the bond to the market, in an effort to access funds to finance our capacity expansion programme," Mr Njoroge said.
He added that the details of the KenGen PIBO, which is expected to give both institutional and retail investors an opportunity to participate, will be unveiled in due course. The MD observed that there is a growing appetite for long-term debt instruments, which the company would like to leverage on to finance investments in additional power generation capacity.
KenGen's decision to seek funds from the debt capital market is a break from the past, where the company relied heavily on development financial institutions to finance its power generation projects.
"The debt capital market gives KenGen an opportunity to raise funds to finance our capital expenditure in a flexible manner, while allowing Kenyans to participate in infrastructural development, through an attractive investment opportunity," he said.
The investment in additional power generation capacity through the bond, is part of KenGen's five-year strategy of increasing its capacity by 500 megawatts to stabilise the power situation in Kenya. A third power generating plant at Kipevu, Mombasa, estimated to cost 10 million euros (Sh1.05 billion) is one of the projects expected to benefit from the bond.
The plant is estimated to generate 120 megawatts of electricity, which will be injected into the national grid to boost electricity supply."This will enable us continue with our critical role of ensuring that there is additional capacity to cope with the rising demand, anticipated at eight per cent annually.
Investment in additional generation capacity will not only help the country cope with additional demand, but also the power demand associated with the implementation of Vision 2030," Mr Njoroge added.
The transaction team for the bond comprises: KPMG as the financial advisors, Standard Chartered Bank the lead arranger, and Standard Investment Bank as the lead sponsoring broker.
Other members of the team are: Hamilton Harrison & Mathews as the legal advisors, PWC as the reporting accountants, and Ernst & Young as the auditors. Lowe ScanAd and Ogilvy PR are handling advertising and communications.
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