KENYA – Acorn Group, a project management services provider and PE fund Helios private equity investing firm have launched the first green bond in Kenya to help fight climate change.
The debt instrument which is the first in the eastern and central Africa region was issued by Acorn Holdings so far it has raised KSh4.26 billion (US$41.3m) from investors which is 85 percent subscription of the targeted Sh5 billion.
The green finance instrument was made possible following the successful completion of the green bond rules and guidelines which were launched early this year by the Capital Markets Authority and Nairobi Securities Exchange.
Acorn CEO Edward Kirathe said raising corporate bonds in Kenya is like “walking through a hurricane,” adding that they had set a modest target of Sh2 billion for the first tranche of the medium-term note.
“The current bond market is very bearish and lack of confidence with what is happening with the other bonds. It was very useful to have GuarantCo, a British Firm, behind us because it gave investors comfort that this is a good bond,” he said.
“We were pleasantly surprised because we had initially expected to raise Sh2 billion now and another Sh2 billion later, and then a final Sh1 billion.”
He said that the investor mix comprised about 30 percent each for pension funds, commercial banks and development financial institutions (DFIs), while insurance firms accounted for the remainder.
Jonathan Muga, the head of Stanbic Investment Banking who were the lead arrangers of the issue, said Kenyan bonds will have to enhance their credit risk profile if they are to stand a chance of being successful.
“It is important to tell your story clearly, cite the benefits, the risks, engage early on a non-deal roadshow and then follow up so that you can come back with interest in your offer,” said Mr Muga.
The green bond will be tax free following changes in the Finance Bill 2019, joining infrastructure bonds which are also tax exempt.
Mr Kirathe said the money will go into funding its low-cost student hostels known as Qejani, that will charge Sh6,380 (£50) a month, to lock in university students.
Acorn is targeting two Qwetu hostels on Thika road to serve United States International University Africa, Kenyatta University and Jomo Kenyatta University of Agriculture and Technology students in the Kasarani area.