BlackRock to acquire stake in Kenya’s 310 MW wind farm

One of the funds overseen by US-based multinational investment company BlackRock is acquiring a stake in a 310 MW wind farm in Kenya, the largest in the African continent.

The stake in Lake Turkana Wind Power Limited (LTWP), which owns and operates the wind farm, is held by the Finnish Fund for Industrial Cooperation (Finnfund). The fund, a development financier and impact investor, has been a shareholder in LTWP since 2014 when the construction work on windfarm commenced.

The shares will be acquired by Climate Finance Partnership (CFP), a public-private finance vehicle managed by BlackRock Alternatives. The deal is expected to close in the second quarter. CFP is BlackRock’s $673 million climate infrastructure investment fund which seeks to cut carbon emissions in emerging markets.

The vehicle is backed by a global consortium of 22 investors, including the French Development Agency, Germany’s KfW Development Bank, Japan Bank for International Cooperation, the Grantham Environmental Trust, the Quadrivium Foundation, and energy firm TotalEnergies.

The other investors include AXIS Capital, Swedish pension fund AP2, insurer AXA, Dai-ichi Life Insurance, energy company E.ON, Finnish Church Pension Fund, Mitsubishi UFJ, Morgan Stanley, Mizuho Bank, MUFG Bank, the Richter Family Office, Standard Chartered Bank and Sumitomo Life.

LTWP was the biggest equity investment made by Finnfund at the time of the commitment. It also was one of the biggest private investments in Kenya’s history. Together with the return paid by the company, the transaction will more than double the initial investment made by Finnfund.

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Finnfund said that the return paid by the company and the transaction sum together correspond to more than twice the capital investment made by Finnfund.

Helena Teppana, Finnfund’s associate director, said that they were there to share the initial risk of the construction phase and the start of operations.

“Today, it has been proved that the wind farm lives up to expectations and generates revenue from providing Kenya with low-cost green power. It is time for us to move on. Going forward, we will continue investing in renewable energy projects in the continent,” Helena added.

David Giordano, global head of climate infrastructure at BlackRock Alternatives, said they were excited for CFP’s first investment to be in Kenya, one of Africa’s fastest-growing economies.

“They look forward to working with our partners in the region to source future developments that not only capitalise on the historic investment opportunity presented by the energy transition, but also contribute to local economies,” he added.

Finnfund gets its funding from the State of Finland and the private capital markets, as well as retained earnings from its investments. All profits get recycled into new projects that drive sustainable development. Renewable energy is one of Finnfund’s focus sectors. Recent investments include a geothermal power project in Nakuru County, Kenya.

The Lake Turkana wind farm, comprising 365 wind turbines, was connected to the national grid in 2018. Today it meets around 14% of Kenya’s electricity demand, reducing the country’s reliance on fuel imports.

As one of Africa’s fastest-growing economies, Kenya expects its total power demand to grow at the rate of almost 5% per annum amid increasing urbanization, rural electrification and rapid economic development.