'Kite' is a UK based company that specialises in large scale, bespoke, LED lighting installations in both indoor and outdoor settings. The company which was founded in 2015 has a track record of delivering lighting projects in the UK and the Netherlands and is pursuing projects globally.
Kite approached Altimapa for help with the financing of their largest project to date - to replace traditional road-side lighting with bespoke LED fittings, over the entire road network of a Caribbean island.
The two major challenges for the capital raising project were from the outset, the project jurisdiction, and its size which was meaningful when compared to the company's balance sheet. also, and while large relative to the company's financials, at under USD $10 million, the project was nevertheless small by the standard of the infrastructure investment sector. The project was further complicated by the dynamics of dealing with government - delays and changes of scope were frequent both before and after the installation contract was signed. On the positive side, the country was well rated in terms of both governance and credit and so it is positively seen by lenders that are active in the region. Furthermore, the project was also well structured by Kite and much of the performance risk had been addressed and mitigated to the extent possible.
From a capital raising perspective, this was clearly a challenging project: many of the traditional lenders in the space declined to participate because of the relative size of the project vis-a-vis the company's balance sheet. theproject was also not attractive to traditional EM infrastructure investors because of the small size. The frequent updates to the installation project scope were also a challenge that required equally frequent updates to the financial model and other materials: in the end, the company was tasked with installing not only LED lighting but also a CCTV network and solar panels to power lights in areas with sparse or aging electric grid coverage.
Nevertheless, and after a careful and detailed mapping of the relevant investor space, Altimapa was able to narrow down the discussions to a lender that specialises in promoting sustainable infrastructure in the region and is able to participate in in opportunities with the relevant characteristics. Being sponsored by major international development agencies and banks active in the region, this counterparty had the additional benefit of offering relatively long-term and low-cost funding (critically, without the need for equity participation in either the company or the project). Hence, and once the installation project parameters stabilised and all information became available, discussions between the company and the lender progressed quickly.
While the final close is still awaiting clearance from the government, we expect that to be confirmed shortly.
|UK-Based LED Lighting Specialist|
|Financing municipal LED lighting project in the Caribbean|
Completing late stage due-diligence, expected close in Q1 2021