Syndicated financing: co-lending partnerships with crowd lending platforms

July 2021
Photo credit: One Acre Fund

Energy 4 Impact’s research programme Crowd Power, supported by UK aid via Transforming Energy Access, has launched a new report on syndicated financing involving crowd lending platforms. The report introduces lenders, crowd lending platforms, off-grid energy companies, and other industry stakeholders to co-lending and syndicated financing. It explains how co-lending works, the main benefits and challenges for different participants, its relevance for crowd lending, and the key considerations for anyone developing co-lending structures.

Energy access-related crowdfunding has grown rapidly, raising $160 million for the energy access sector between 2015 and 2020. Between 2015 and 2019, energy access-related crowdfunding volumes doubled each year on average. Crowd lending now accounts for approximately 90% of the volumes raised.

As crowd lending platforms scale, partnerships between crowd lending platforms and traditional impact investors are increasing. While there is increased collaboration between financiers, there are few syndicated financing transactions that involve crowd lending platforms. Syndication may involve additional cost and complexity, but it has a number of benefits for impact investors, crowd lending platforms and borrowers alike.

The energy access-related debt crowdfunding market is dominated by two types of platforms. Growth debt platforms such as Trine (Sweden), Energise Africa (UK), Lendahand (Netherlands), bettervest (Germany) and Crowdcredit (Japan) provide larger ticket loans of $300,000 plus. Venture debt platforms such as Kiva’s direct lending initiative (USA) and Charm Impact (UK) offer smaller tickets of $10,000 to $100,000. Syndicated financing is mainly relevant for the growth debt platforms because they can manage the larger, more complex transactions that are likely to be brought to them by potential arrangers.

For other reports on crowdfunding developed by Energy 4 Impact, here’s a useful overview.