Deal Summary
Axian Energy, a subsidiary of the Madagascar-headquartered Axian Group, has secured €84 million (~$89 million) in debt financing to construct the Kolda Project, Senegal’s largest utility-scale solar and battery project. The financing comes from the Emerging Africa & Asia Infrastructure Fund (EAAIF) managed by Ninety One Group (€30.5 million), the Dutch development bank FMO (€30.5 million), and the Deutsche Investitions- und Entwicklungsgesellschaft (DEG), a subsidiary of KfW Group (€23 million). Located in Casamance, Senegal, this solar facility will feature two plants with a total capacity of 60 MW and a 72 MWh battery storage system. The project has a total estimated cost of €105 million and is scheduled for completion in 2026. Upon completion, the Kolda Project will provide clean energy to 235,000 residents in the Casamance region while improving grid stability and peak-hour supply reliability. Axian Energy’s portfolio includes nearly 250 MW of renewable projects across Zambia, Madagascar, and
Deal Rationale
EAAIF, FMO, and DEG are all significant investors in Africa’s budding renewables landscape. In late 2023, EAAIF previously extended a €30 million (~$32 million) senior secured loan to Axian to help achieve its 1 GW renewable power target by 2030. Similarly, FMO’s 2023 funding of €19 million to Africa REN shows a continued commitment to sizable, bankable solar projects in West Africa. These investments underscore confidence in Axian’s capability to manage large-scale solar projects. Axian recently expanded into Rwanda by acquiring a 49% stake in Gigawatt Rwanda and purchased a 30 MW facility in Burkina Faso, bolstering its greenfield project portfolio.
Meanwhile, the choice of utility-scale solar with battery storage provides Senegal with a more resilient energy solution compared to other solar models like pay-as-you-go (PAYG) or mini-grids. Utility-scale projects support broad regional needs and align with grid stability goals. In contrast, PAYG and mini-grids, while beneficial in rural electrification, lack the capacity for large population centres and industrial zones like those in Casamance. For example, the Kolda BESS system does not just provide intermittency management for the plant but supports the entire grid by storing energy during the day and injecting it to stabilise the grid whenever needed. By focusing on a centralised grid-tied solution, Axian Energy can effectively address Senegal’s regional power instability while leveraging economies of scale in project development and energy storage.
- Market Opportunity: Senegal’s energy demand has surged by 50% over the past decade, with further growth expected due to increasing industrialisation and population growth, particularly in Casamance. With a national goal to boost renewable energy to 40% (currently ~15%) of total grid capacity by 2030, utility-scale solar projects like Kolda are critical. These projects benefit from declining solar PV costs (up to 90% by some estimates) and are well-suited to meet the demands of urban and semi-urban areas, providing reliable, large-scale power and supporting grid stability. Utility-scale solar’s ability to meet substantial demand and enhance grid stability makes it an optimal solution for Senegal’s energy goals. Unlike solar mini-grids and PAYG solutions, which serve rural or low-density areas, utility-scale solar projects with BESS are more suited for high-demand urban and semi-urban areas. These systems provide large-scale, reliable power output essential for supporting both residential and commercial users. As the infrastructure for renewables expands, utility-scale projects are expected to dominate, presenting private equity investors with a unique opportunity to generate stable returns in this growing market over the medium to long term.
- Risk/Return Analysis: Large-scale solar projects face challenges like high capital costs and off-take reliability. Axian’s track record in successfully securing and executing projects places it in a strong position to manage these risks. It leverages concessional financing to ensure project viability and mitigate investor risks. This strategy is validated by its robust financial performance: in 2023, Axian Energy reported revenues of €434 million with a 12.4% EBITDA margin. Notably, 11% of this margin was derived from renewable energy segments in 2023. The state-owned utility in Senegal, likely the off-taker, poses some risk due to payment delays, which Axian addresses through strategic financial modelling and third-party revenue guarantees. Looking ahead, Middle Eastern funds’ increasing focus on African renewable portfolios presents a promising funding avenue for Axian Energy. Combined with its strategic expansion in Senegal and other high-growth markets, the company is well-positioned to generate significant returns while advancing West Africa’s energy goals.
About the Fund Managers
Managed by Ninety One Group, Emerging Africa & Asia Infrastructure Fund (EAAIF) is a part of the Private Infrastructure Development Group (PIDG), focused on mobilising private sector investment in essential infrastructure across Africa and Asia. With over $2.5 billion committed and more than $16 billion in private investment mobilised, EAAIF targets projects that promote sustainable growth and address pressing infrastructure gaps. The fund’s priorities include energy, water, and telecommunications, and it operates with the dual objectives of commercial return and high-impact outcomes, particularly in frontier markets. Previously known as the Emerging Africa Infrastructure Fund (EAIF), the Fund recently changed its name as it expanded its remit to invest in South and Southeast Asia.
Ninety One is an asset management firm headquartered in London and Cape Town, managing $170.9 billion across 15 countries. Founded in 1991, Ninety One provides investment expertise across differentiated fixed-income, credit, and specialist equities. The firm has a strong emphasis on sustainable investment in emerging markets and is employee-owned, with 29.4% of shares held by staff. Ninety One manages EAAIF, aligning its mission of impactful infrastructure investment with a focus on long-term financial stability and socio-economic development. Ninety One has managed the EAAIF since 2016.
Based in The Hague, Dutch Entrepreneurial Development Bank (FMO) is the Dutch government-backed development finance institution focused on sustainable private-sector growth in emerging markets. With a portfolio exceeding €12 billion, FMO invests in sectors like renewable energy, financial inclusion, and agribusiness. The bank emphasises projects that contribute to environmental and social goals, aiming to promote climate action and reduce inequalities. Its investment philosophy centres on high-impact financing that strengthens local economies and enhances access to critical resources in underserved regions.
Deutsche Investitions- und Entwicklungsgesellschaft (DEG) is a German development finance institution that supports private sector investments in developing economies, managing a portfolio of approximately €9 billion. A subsidiary of KfW Group, DEG targets sectors that drive economic and social impact, including infrastructure, manufacturing, and agriculture. With a commitment to sustainable development, DEG finances projects that create jobs, improve access to essential services, and foster economic growth in challenging markets across Africa, Asia, and Latin America.
