47834 - SIMA COMMERCIAL & INDUSTRIAL SOLAR GREEN BOND B.V.

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Summary of Investment Information

Project Number

47834

Company Name

SIMA Commercial & Industrial Solar Green Bond B.V.

Date SPI Disclosed

Aug 31, 2023

Country

Africa Region

Region

Africa

Projected Board Date

Sep 30, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 23, 2024

Department

Regional Industry - FIG Africa

Industry

Funds

Previous Events

Approved : Dec 20, 2023
Signed : Dec 29, 2023
Invested : Aug 15, 2024

Sector

Other Sector Fund

Additional Project Attributes

Blended Finance

Project Description

SIMA Commercial & Industrial Solar Green Bond B.V (SIMA Solar Bond or the Fund) is a structured bond fund that will finance small-scale productive-use solar projects within the commercial and small industrial (C&I) sectors throughout Africa. The Fund will have a target size of US$150 million, a maturity of 10 years, and will provide both shorter-term corporate loans as well as longer-term project finance. The SIMA Solar Bond structure contains multiple tranches, including a catalytic tranche, followed by junior, senior, and super senior tranches. IFC will act as an anchor investor by investing in up to 35% of the Bond (the Project). The Project is expected to be supported by IDA20 Private Sector Window (PSW) Blended Finance Facility (BFF) and IFC-Global Energy Alliance for People and Planet (GEAPP) as described in the Blended Finance Section.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Funds
Quasi-Equity	Funds
Quasi-Equity	Funds

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

The Project is expected to increase access to climate finance for C&I customers and address the financing gap, given that many commercial banks in the region lack the in-house expertise and do not offer tailored financial products that meet the needs of these clients. The Project also supports the development of solar solutions to displace power supplied by more carbon-intensive and polluting sources (i.e. diesel generators and electricity grids) and is expected to reduce GHG emissions. At the market level, the Project is expected to enhance financial integration of the power sector by helping create mechanisms to draw long-term financing for the distributed generation solar segment. Through demonstration and replication, the project is expected to help crowding-in private capital for climate financing activities through new funds and investors.

IFC’s additionality through the Project is both financial and non-financial. Financial additionality includes financing structuring and resource mobilization, stemming from IFC’s role as an anchor investor, attracting a wider range of investors. Furthermore, the support from GEAPP and IDA PSW will improve the risk profile of the Bond. Non-financial additionality includes setting standards by supporting SIMA in the application of international best practices in Environmental and Social (E&S) standards and risk management.

E&S Category Rationale / Risks and Mitigation

The Project entails an investment of up to US$45 million in a 10-year structured fund to support small-scale productive use solar projects within the commercial and small industrial sectors throughout Africa. Targeted solar C&I projects are expected to be small to medium size, ranging from 100 kilowatts to 5 megawatts. The end-users’ sectors of activity include agriculture, commercial, manufacturing, healthcare, and hospitality. The expected E&S risks and impacts of the Project are considered medium. As such, the Project has been categorized as Category FI-2 in accordance with IFC's Sustainability Policy. The Project will not support coal-related activities or higher-risk business activities that may include a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant Occupational Health and Safety risks. The applicable E&S performance requirements for this Project include the IFC Exclusion List, relevant host country E&S laws and regulations, and the IFC Performance Standards. The key E&S risks and impacts derive from the Fund Manager's capacity to identify and manage the potential E&S risks associated with the solar C&I activities. Typical risks and impacts include occupational health & safety, supply chain-related risks, labor and working conditions, and waste management, among others.

The Fund Manager has developed an Environmental and Social Management System (ESMS) specific to financing activities in the solar C&I sector. In addition, SIMA has designated staff responsible for managing the ESMS implementation, and staff undertake basic E&S risk management training. The ESMS review process includes E&S risk screening for excluded activities and E&S categorization, an E&S assessment of the company and supported project(s) against applicable local laws and the IFC Performance Standards, development of an E&S action plan, inclusion of E&S covenants into the legal agreement, and post-disbursement monitoring. For this project, SIMA will be required to enhance its ESMS: (i) to enable it to screen out higher-risk transactions; (ii) to specify criteria for the use of third-party consultants in the E&S assessment and monitoring work; (iii) to develop screening tools to manage occupational health and safety risks related to solar C&I projects; (iv) to develop standard E&S clauses for inclusion in developers’ contracts; (v) develop solar supply chain screening provisions; and (vi) update the external communication mechanism. In addition, the Fund Manager will be required to develop an E&S risk management training plan for staff involved in implementing the Project and provide E&S risk management training. IFC will review the E&S due diligence assessments for the first five investments prior to investment to support the ESMS implementation.

Contacts

For Inquiries About the Project, Contact

Social Investment Managers and Advisors LLC
Vinay Kumar Bandaru
Senior Vice President
+ 230 55180334
vinay@simafunds.com
157 Columbus Ave, Suite 512, New York, NY 10023
https://simafunds.com/

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Task Title & Description	Anticipated Completion Date
Staff Training Plan	10/31/2023
Enhance ESMS	10/31/2023

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