RMB SECURES SCALABLE DEBT FACILITY FOR KOKO

Client challenge

KOKO Networks is a carbon-financed clean cookstove provider, headquartered in Nairobi, Kenya. It has since inception in 2014 moved millions of Kenyans off charcoal and kerosene, replacing it with sustainable bioethanol cooking fuel.

The company was founded to solve the challenge of deforestation in Africa (driven primarily by charcoal being used as a cooking fuel). Customers use their smart canisters to access KOKO fuel from a dense network of 2,500 high-tech KOKO Fuel ATMs located in convenience stores across urban Kenya.

Carbon emissions reduced by KOKO are audited in global compliance and voluntary carbon markets. Revenues from the sale of high-quality carbon credits are then shared with Kenyan households in the form of significant discounts on KOKO fuel and cookers, enabling the solution to be affordable by even the poorest household segments.

KOKO required financing in the form of a scalable debt facility linked to future credit cash flows to enable it to achieve its growth ambitions in support of Africa’s energy transition.

The RMB solution

RMB acted as the lead mandated arranger of a long-term debt facility provided to KOKO on commercial terms, which securitises the cash flows from the company’s future carbon credit sales.

The debt financing will enable KOKO to scale its business model through financing the further roll out of KOKO cookers in Kenya and other targeted markets.

“This is an innovative, specialist debt instrument that is entirely contingent upon KOKO achieving a certain amount of carbon credit generation,” said Greg Murray, CEO and co-founder of KOKO Networks.

“We are proud to partner with KOKO in supporting their continued rapid growth, while bringing more affordable and lower emissions energy to millions of people in Africa. As a pan-African investment bank, this deal fits well with our ambition to build a market leading carbon trading and finance business operating across Africa,” says Phil Norton, Carbon Finance Lead at RMB.

“Partnering with KOKO will boost African carbon markets in line with the Nairobi Declaration to support Africa’s energy transition,” says Nigel Beck, Head: Sustainable Finance and ESG Advisory at RMB. The Nairobi Declaration was delivered at the close of the Africa Climate Summit in Kenya in September in 2023 and formed a core part of Africa’s negotiating position at the 2023 COP28 climate summit.

Client benefits

RMB’s innovative carbon financing solution will not only enable the expansion of clean energy and forest protection across Africa, but also improve the quality of living for many consumers across Africa in a continent-wide energy transition to clean and modern fuels.

“To scale our business in many countries we’ll need to invest a lot of money in years ahead to take this proven business from Kenya into other markets. This debt facility from RMB gives us some initial firepower to do exactly that,” said CEO of KOKO, Greg Murray.

He added: “We are proud to embark on this long-term partnership with RMB to help accelerate the expansion of KOKO’s platform across Africa. The deal reflects Koko’s growing maturity in being able to obtain large-scale institutional debt on commercial terms, which was previously out of reach for the company due to carbon assets not sitting on its balance sheet in the way that utility assets typically are.”

The resultant carbon revenues are shared with households as a non-government energy subsidy, enabling even the poorest households to switch.