Prime Energy Plc has kicked off investor roadshows as it looks to attract investors for its inaugural green bond worth Rwf9.5 billion, the first-ever bond to be issued by any firm in Rwanda.
The company, which operates four hydropower plants across the country, is issuing a 7-year green bond in two tranches – a Rwandan franc and a United States dollar (USD) – to offer investors diversified options.
The Rwandan franc tranche has a coupon rate of 13.75 per cent and the USD-linked tranche carries an interest of 9.5 per cent, both payable semi-annually.
The offer for the bond opened on September 26th and will close on October 17th, 2024, with subsequent listing on the Rwanda Stock Exchange (RSE) on October 30.
According to the firm, this initiative aims to finance the construction of Rukarara VI hydropower plant, a new power plant, as well as maintain existing power facilities.
Prime Energy’s hydropower plants are located in the Western, Southern, and Northern Provinces of Rwanda.
The CEO of Prime Energy Plc, Sandy Rusera, outlined the strategic approach to utilising the proceeds from the green bond, saying the company committed to transparency, environmental stewardship, and delivering strong returns for investors.
"We hae put in place a very rigorous monitoring and reporting mechanism to ensure funds are used and deployed effectively and in line with the green bond principles,” he remarked during the company’s Investor Day during which investors were given an exclusive tour of Mukungwa II, one of Prime Energy’s power plants.
By reporting quarterly on both financial performance and environmental impact metrics, Rusera said the company’s board of directors was committed to protecting investors’s interests and pursuing sustainable growth.
He also pointed out the board’s diverse expertise in energy and finance as a key factor in shaping the company’s direction, insisting that the committee will oversee the use of proceeds to ensure compliance with the green bond framework throughout its duration.
He made it clear that solid corporate governance is crucial for investor confidence, saying, "We have very solid corporate governance to ensure not only returns, but as well as how we run our companies.”
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Bond has been certified
BK Capital, an investment advisory firm, serves as the principal financial advisor and sponsoring broker for the green bond, which has been constructed to meet all capital market criteria.
According to Siongo Kisoso, Managing Director of BK Capital, the bond was developed to meet the varying demands and appetites of various investors, including pension schemes, banks, insurance companies, and individual investors.
"This bond has undergone a thorough review by the Capital Markets Authority, ensuring we meet the transparency and disclosure requirements that protect investors,” he said, highlighting that it features robust risk mitigation strategies, including proven technology and long-term contracts with the government, enhancing its appeal.
Prime Energy has 25-year concession agreements with the Government of Rwanda and power purchase agreements (PPAs) with the Energy Utility Corporation Limited (EUCL).
Kisoso explained that the interest rate of 13.75% was set based on benchmarking against similar issuances in the market to ensure competitiveness, adding that investors benefit from favorable terms, such as a lower withholding tax rate of 5 per cent on interest compared to the usual 15 per cent.
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This green bond has been verified based on a Second Party Opinion (SPO) by IBIS ESG Consulting Africa that confirms alignment with the four core components of the updated International Capital Market Association (ICMA) Green, Social, and Sustainability Bond Principles issued in June 2021.
When investment applications for listings are submitted to the Rwanda Capital Market Authority(CMA), they must meet specific criteria for approval, including governance structure, profitability track record and level of disclosures.
While the CMA approves the listings, the Rwanda Stock Exchange is responsible for ongoing monitoring.
Thapelo Tsheole, chief executive of the CMA , expressed optimism for future issuances, saying Prime Energy will inspire other issuers to go to the market to raise green financing.
"The introduction of these products not only provides new investment opportunities but also supports environmental sustainability. These products offer high returns due to their novelty in the market,” he said of green debt instruments.
"There’s potential for structures like unit trusts to allow smaller investors to participate. This development opens up significant opportunities for Rwandan institutions to explore new avenues for investment,” he added.
Tsheole highlighted that green debt instruments hold high prospects for both individual investors and for the market.