Kalahari Grid Energy — Funding Structure
The $5.3 billion capital programme, the project-finance gearing, the development and equity capital, the DFI and climate-finance partners and the use of funds underpinning Kalahari Grid.
Section 8 · Business Plan
Funding Structure
The $5.3 billion capital programme, the project-finance gearing, the development and equity capital, the DFI and climate-finance partners and the use of funds underpinning Kalahari Grid.
The capital programme is financed at two levels: non-recourse project
debt raised in each SPV against its contracted PPA cash flows, and
equity provided by the sponsor, infrastructure funds, DFIs and
climate-finance institutions into the holdco and down into each SPV.
This Memorandum models a lender-realistic 62% blended gearing; the
resulting equity requirement of roughly $2.0 billion across the
build-out is the transaction’s true capital ask.
| Source | Role | Instrument |
|---|---|---|
| IFC (World Bank Group) | Senior lender / DFI equity | Project debt; possible blended-finance equity |
| DBSA | Senior lender | Project debt into SPVs |
| African Development Bank | Senior lender / guarantees | Project debt; partial risk guarantees |
| Infrastructure funds | Equity | Holdco and SPV equity (CIP-style) |
| Climate-finance institutions | Concessional / blended | Concessional debt or first-loss equity |
| Commercial banks (local + international) | Senior lenders | Project debt tranches |
| Sponsor | Development & equity | Development capital; retained IPP equity |
equity gap and the grid
Two structuring imperatives follow from the analysis. First, the
equity: a bankable 62% gearing requires ~$2.0bn of equity, not the
~$1.33bn a 75:25 split implies — this must be committed and syndicated
before Phase 1 close, with construction-phase bridge financing arranged
to cover the deployment-to-COD timing gap. Second, the offtake: because
returns depend on achieving a blended tariff near $0.070/kWh, equity
commitments should be staged against the origination of premium
corporate PPAs, not merely against capacity. DFI and climate-finance
participation — including concessional or first-loss tranches — is the
natural mechanism to bridge the gap between the base-case ~7% return and
an infrastructure-equity hurdle while the corporate-offtake book is
built.
Proposed structure per SPV: 62% senior project debt (18-year, ~7.5%
USD, 6-month DSRA, 1.30x DSCR covenant with distribution lock-up), 38%
equity; holdco-level development facility for pre-financial-close costs;
and a portfolio-level bridge for construction timing. REIPPPP SPVs
benefit from the programme’s government-backed PPA, Implementation
Agreement and Direct Agreement (lender step-in), materially de-risking
the debt.
8.2 Indicative term-sheet framework (per-SPV)
| Term | Proposal |
|---|---|
| Borrower | Project SPV (ring-fenced); holdco equity contributor |
| Senior debt | 62% of project cost; 18-year amortising; ~7.5% USD blended |
| Security | First-ranking over assets, PPA revenues, accounts, insurances; cession & step-in (Direct Agreement) |
| DSRA | 6 months’ debt service, funded at COD |
| Covenants | Min DSCR 1.30x; distribution lock-up below 1.30x; completion support pre-COD |
| Equity | 38%; staged against grid-secured, PPA-contracted projects |
| Completion | Fixed-price date-certain EPC; liquidated damages; independent engineer certification |
| Conditions precedent | Signed PPA; grid connection agreement; environmental authorisation; EPC & O&M contracts; DSRA funded |
8.3 Precedent structures and market context
The proposed structure is consistent with how utility-scale
renewables and IPP platforms are financed in South Africa and comparable
markets. REIPPPP has mobilised over R256 billion of private investment
across successive windows under standardised, government-backed 20-year
PPAs, with no awarded project having failed — a track record that
underpins lender appetite. Corporate PPA portfolios (mining, data
centres) are increasingly bank-financed, and DFIs including IFC, DBSA
and AfDB routinely anchor renewable debt and blended-finance equity
across the continent.
| Precedent structure | Relevance to Kalahari Grid |
|---|---|
| REIPPPP project finance (60–80% gearing, 20-yr PPA) | Template for utility-offtake SPVs; standardised, bankable documentation |
| Corporate PPA portfolios (mining/data-centre) | Template for premium-tariff SPVs driving the bankable-path returns |
| DFI blended finance (concessional + first-loss) | Mechanism to bridge base-case return gap to infra-equity hurdle |
| Infrastructure-fund platform acquisitions | Precedent for the 10–12x EBITDA exit and buyer depth |
| BESIPPPP storage projects (615 MW, BW2) | Template for storage-services revenue and grid-firming value |
The financing ask is therefore not novel in kind — it is a scaled
aggregation of well-precedented SPV structures, with the distinctive
features being portfolio scale, the grid-corridor strategy, and the
explicit, disclosed dependence on the offtake mix to reach bankable
coverage.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Kalahari Grid Energy (Pty) Ltd.