Bangalore-based Orb Energy has raised more than $15 million in equity and debt to grow its in-house finance facility of solar rooftops for small and medium-sized enterprises (SMEs) in India and to further expand its Kenya operations.
As part of the initiative, the Netherlands Development Finance Company (FMO) provided $4 million in equity, and Orb signed a loan agreement with the Overseas Private Investment Corporation (OPIC) – the United States development finance institution – for $10 million in long-term debt.
Funds will be used for growth of Orb’s unique in-house platform in India that provides finance to SMEs looking to reduce electricity costs through ownership of a rooftop solar system.
The new funding now positions Orb for profitable growth in the rooftop solar sector in India. Orb expects its 15 megawatt (MW) in annual rooftop solar system sales between 2017 ad 2018 to more than triple in the near future, growing to 50MW annually by its 2019 to 2020 financial year (FY).
Orb is a leading provider of solar energy systems, with more than 150,000 systems sold in India since 2006. Unique to the solar industry, Orb is vertically integrated, manufacturing its own solar photovoltaic modules and solar water heating systems in Bengaluru, Karnataka.
“We are extremely pleased that FMO increased its equity position in Orb Energy, adding $4 million to its earlier investment of $2 million in 2015,” said Damian Miller, Orb’s Chief Executive Officer.
“We see this as a vote of confidence in our unique approach to the solar market in India, which has allowed us to leverage a further $10 million from OPIC to expand our finance platform for SMEs looking to save money on their electricity bill with their own rooftop solar system,” he added.
In India, rooftop solar systems offer commercial and industrial customers a three- to four-year payback without any subsidy – an unheard of return on investment on an unsubsidized solar power system.
But many cash-constrained SMEs in India cannot afford the up-front costs of solar without credit. Orb offers a finance facility to SMEs that matches their payback period, after which all their power is effectively free. Furthermore, Orb’s credit check is quick, often completed in less than seven days, and its finance products require no collateral.
This easy access to reasonable cost finance is driving solid growth in Orb’s commercial sales of rooftop solar systems.
“Orb has demonstrated through its unique in-house finance facility and vertically integrated approach that profitable growth is possible in this fast moving, highly competitive segment of India’s solar market,” said Jurgen Rigterink, CEO of FMO.
“Enabling customers to access reasonably priced financing helps SMEs generate their own power and save money,” OPIC CEO Ray W. Washburne added.
“OPIC is proud of its partnership with Orb and looks forward to supporting access to energy in these developing markets.”
Additionally, Orb successfully raised more than $1 million for Orb’s solar operations in Kenya. Pamiga, an investor in African finance institutions and small- to medium-sized enterprises, provided $500,000 in equity, and $550,000 came from DEG – Germany’s development finance institution – using funds from the German Federal Ministry for Economic Cooperation and Development’s (BMZ) Upscaling Programme.
The funds will be used to further expand Orb’s residential and commercial solar business in Kenya, where Orb has sold more than 10,000 systems since 2014.