Herbert Smith Freehills has advised CfC Stanbic Bank and other lenders on the project financing of the US$200 million Kwale sugar plantation, refinery and power plant in Kenya, which reached financial close last month.

A consortium of banks led by Standard Bank's Stanbic agreed financing of US$120 million, split into US$100 million over a nine-year tenor and the remaining US$20 million over a 12-year tenor. The debt to equity split was 60/40. Standard Mauritius provided US$15 million, Standard Bank Kenya provided US$22.5 million, and local development bank PTA provided US$20 million. The balance was split between a combination of Mauritian and Kenyan banks.

The project, which is the first of its kind in Kenya, is situated 80km to the south of Mombasa and involves a greenfield sugar plantation, a sugar refinery and an 18MW cogeneration plant run on bagasse, a by-product of cane. On completion the project will have a capacity of 3,000 tonnes of cane per day, and will put power back into the Kenyan power grid.

The sponsor is Kwale International Sugar Company Limited ("KISCOL"), a joint partnership between the sugar trading Pabari family and Mauritian sugar miller Omnicane. The project is expected to be fully operational in mid-2014.

The Herbert Smith Freehills team was led by finance partner Martin Kavanagh assisted by associates Joanne Elson and Lucy Johnson.

Martin Kavanagh commented: "This is an innovative project financing for the Kenyan market involving a wide range of regional lenders, which bodes well for the project finance market in East Africa. It was pleasing to be involved in this type of integrated and ground-breaking project which is becoming increasingly common in parts of East Africa."