Star Rapper Akon Mulls IPO of Chinese-Funded African Solar Unit
(Bloomberg) -- Akon, the star rapper and renewable-energy entrepreneur, is considering an initial public offering of his Chinese-funded solar business in Africa to fuel an intercontinental expansion.
“That’s definitely a conversation we’ve had with the financial team on how to structure as we move forward,” Akon said in a telephone interview. “We’ve been moving at a really rapid pace.”
In just three years, the Akon Lighting Africa initiative has completed 203,200 small-scale solar projects including the installation of miniature grids and street lighting across 17 African countries. The financial engine and IPO candidate behind the venture, Solektra International LLC, is owned by its three co-founders, including Akon. Pilot projects in Brazil are already underway with expansion plans for China and India, according to the singer, who said his “dream” is to eventually build a solar farm in the U.S.
Akon, whose full name is Aliaune Damala Bouga Time Bongo Puru Nacka Lu Lu Lu Badara Akon Thiam, was born in St. Louis and raised in Senegal until the age of seven. He’s produced two multi-platinum albums, been nominated for five Grammy awards and collaborated with stars including Michael Jackson. His music videos have racked up hundreds of millions of views online.
Since releasing his last album seven years ago, Akon’s built his solar business, Akon Lighting Africa, with credit lines of $1 billion from Chinese backers. The venture has structured about $400 million of solar deals to date.
“This project consumed so much of my time, I didn’t even realize that seven years went by,” said Akon, who lives in Los Angeles and visits family in Senegal. “I’ve been out of the loop, focusing on the Lighting Africa project.”
The International Energy Agency estimates about half the world’s 1.2 billion people without ready access to electricity live in Sub-Saharan Africa. New solutions to bridge gaps in energy access have emerged as the price of solar panels has fallen. Rather than relying on diesel and kerosene generators to provide electricity, off-grid communities are beginning to turn to solar.
“Using small-scale solar and storage to bring basic electricity to underserved parts of Africa is emerging as a commercial opportunity,” said Itamar Orlandi, head of frontier power analysis at Bloomberg New Energy Finance. “But the skill set needed for selling retail solar products is very different from that required to develop large power projects.”
Akon partnered with Samba Bathily, an businessman from Mali, and Senegalese political activist Thione Niang in 2012. All three own equity stakes in Solektra. Bathily previously worked with Chinese companies on agricultural and infrastructure projects and helped set up partnerships with Nanjing-based power equipment makers Sumec Group Corp. and Nari Group Corp.
“We provide their equipment and also pre-finance for the projects,” said Keno Xiao, project manager at state-owned Sumec. Because it’s only been about three decades since many Chinese emerged from the same energy poverty afflicting many Africans today, “we can feel and understand what they need,” he said.
Back in 2004, when Akon released his debut album Trouble, the off-grid solar industry didn’t exist. Fast-forward 13 years later and the demand for off-grid rooftop panels and miniature grids is growing exponentially. The market increased to about $700 million in 2015, according to Bloomberg New Energy Finance.
Akon Lighting Africa works with local governments and banks to set up public-private partnerships to finance projects. Solar panels are supplied by Chinese companies. Bathily negotiates a payback period with local governments ranging from three to eight years.
“It’s deal-based, once we have a contract we negotiate with them, we structure with a local bank which guarantees the project and then the government guarantees the local bank,” Bathily said.
China’s Sumec is prepared to continue supporting Akon’s projects without a cap on financing and plans to follow Akon into new markets, according to Xiao.
Partners may also eventually raise funds in the capital markets and are having discussions about both equity and debt investors, according to Akon and Bathily, who is also talking with a French bank to arrange a loan.
While finance is being arranged, Solektra is building manufacturing capacity in Mali’s industrial zone. A $2-million assembly plant for solar street lights, made with France’s Sunna Design, is complete but not yet operational, according to Bathily.
“We’re moving fast, but we realized that the more countries we’re tacking along, the harder it’s becoming to maintain,” said Akon, who released new single, Khalice, with Senagal’s Youssou N’Dour last month and plans to release a new album later this year.
“I can now put more energy into the music,” he said. “It’s funny because the fans didn’t even realize, they’re like ‘What! It’s been seven years since you put out an album?”’