MICROCAPITAL BRIEF: PaygOps Enables SMEs to Sell PAYGO Solar Receivables to Investors

PaygOps, the primary product of UK-registered Solaris Offgrid, recently released a service through which providers of pay-as-you-go (PAYGO) solar products can raise funds by selling receivables. The software from PaygOps allows investors to study and purchase PAYGO providers’ contracts. This reduces the extent of due diligence lenders must perform on the providers relative to the more common practice of using the contracts as collateral for a loan. PaygOps envisions this reducing investment costs sufficiently to bring the minimum profitable PAYGO investment size from approximately USD 500,000 to less than USD 100,000.

Solaris CEO Siten Mandalia said, “With this new facility, we aim to segregate credit provision by enabling investors to participate directly in pools of receivables. By streamlining financing in this way, we can facilitate hundreds of distributors in reaching the… unbanked population in need of essential products.”

Providers of PAYGO solar products offer equipment such as home solar electricity systems and water pumps that can be enabled and disabled remotely as users choose to purchase units of service. Kenya-based Pawame provides PAYGO solar products to 16,000 households that are not connected to power grids. It is in the process of selling a portion of these contracts to investors via PaygOps for an undisclosed price. The seed investor in these sales is First Growth Ventures, a France-based impact investor.

First Growth Ventures partner Maxime Bouan argued, “Managing the due diligence and complex debt structuring can be rather challenging for investors in the PAYGO market due to the inconsistency of data formats we are presented with. Having access to standardised data and being able to exhaustively assess receivables portfolios from early-stage distributors through PaygOps’ mechanism is a game-changer for investors in terms of costs and time-saving.”

Founded in 2014, Solaris provides software and other services that support companies in developing countries that serve people with low incomes.

Sources and Additional Resources

PaygOps press release
https://www.paygops.com/post/receivables-finance-pilot-with-fgv-pawame

Solaris homepage
https://www.solarisoffgrid.com/

Pawame homepage
https://www.pawame.com/

VC4A profile on First Growth Ventures
https://vc4a.com/first-growth-ventures/

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