A Swiss impact asset manager, responsAbility, has announced the first close of its new energy access fund.
The private debt fund addresses the lack of access to clean power globally with a strong focus on sub-Saharan Africa and South and Southeast Asia.
It is set up as a blended finance structure offering different risk tranches and has received commitments from a number of prominent public and private investors.
A second close is expected for later this year.
The Fund is an initiative launched in partnership with AHL Venture Partners, Ashden Trust, Bank of America, Bohemian Impact Investments, Calvert Impact Capital, Clean Technology Fund, EIB, Facebook, FMO, Good Energies Foundation, the government of Luxembourg, IFC, Norfund, OeEB, Shell Foundation, Snowball and UK DFID, among others.
At its first close, the Fund stands at $151 million. It could grow to $200 million with a second close foreseen for later in 2020.
Incorporated in Luxembourg as a 10-year closed-ended structure, the Fund targets companies that provide solutions to households without access to electricity and to businesses looking for cleaner, cheaper and more reliable energy.
Beyond the financing of the dynamic off-grid energy sector, it is the first investment fund of this scope to actively address the solar potential for the commercial and industrial (C&I) sector.
“With a solid track record of investing in the energy access space, a committed team of experts and a full pipeline in place, we are ready to expand our activities to include the high-impact commercial & industrial sector. By partnering with entrepreneurs as a first commercial lender, we want to enable clean energy businesses to scale up their activities and attract more funding in the long run,” explained Antoine Prédour who oversees responsAbility’s energy debt financing activities.
Over the lifetime of the fund, portfolio companies are expected to provide clean power to more than 150 million people, add 2,000MW of clean energy generation capacity and reduce CO2 emissions by 6 million tonnes.
Rosanne Whalley, CEO at AHL Venture Partners, commented: “AHL Venture Partners, fund managers of the Adolf H Lundin Charitable Foundation, aim to invest in innovative, scalable business solutions, that contribute to solving pressing social and environmental challenges across Africa. We first invested in a responsAbility-managed fund targeting energy access for populations across sub-Saharan Africa in 2015 and are delighted to take this initiative to the next level.”
Also commenting on the development, Sarah Butler-Sloss, Chair of the Ashden Trust said: “Ashden Trust's priorities are climate change, sustainable development and improving the quality of life of vulnerable and disadvantaged people.
“In alignment with this mission, I am delighted for the Trust to invest in this Fund. It supports exciting new businesses which bring access to renewable energy to households and businesses in emerging economies. Two decades ago I founded the Ashden Awards to showcase scalable renewable energy solutions, but too often these are held back by a lack of investment. This Fund is a catalyst for change and shows the benefits of investing for a zero-carbon future.”
Sustainable finance initiatives
Managing director in Bank of America’s Environmental, Social and Governance division, Dan Letendre, noted that this investment addresses the critical need for access to affordable, clean energy in emerging markets.
“The investment is part of our Blended Finance Catalyst Pool and our broader sustainable finance initiatives, which are helping to advance the United Nations Sustainable Development Goals,” Letendre added.
“We are excited about this opportunity to strengthen a financial intermediary that moves capital to clean energy companies and projects and does so both efficiently and at scale. The off-grid energy sector is at a tipping point, which is why teaming up with a strong fund manager with an impressive track record in sustainably developing markets was very important to us," said Najada Kumbuli, Investment Director at Calvert Impact Capital.
“EIB’s investment in the Fund is a clear demonstration of both our commitment to sustainable energy access. By providing debt to companies supplying off-grid and distributed energy generation solutions to households and SMEs, the Fund will fill an important financing gap in a sector that is essential to achieving both economic and social development,” said Emma Navarro, Vice President, European Investment Bank (EIB).
Other partner comments
“FMO is delighted to announce its investment in the Fund, because it directly contributes to achieving universal access to clean and affordable energy (SDG 7). In addition to investing in senior shares, FMO provided catalytic capital in the Fund’s mezzanine tranche, enabling other parties to invest as well,” said Frederik van Pallandt, Director Energy at FMO. “We regard responsAbility as a trusted partner in the field of impact investments in emerging markets. We share the same vision. This partnership plays a key role in our ambition to come to an inclusive and green financing strategy.”
“By investing a first-loss tranche in the responsAbility Fund, Luxembourg plays an important part in encouraging and mobilizing private capital that is needed to finance the transition to cleaner energy and energy efficiency for households and SMEs in sub-Saharan Africa and South and Southeast Asia. This illustrates once again the power of blended finance solutions and the importance of effective partnerships like the EIB-Luxembourg Climate Finance Platform, which are built around a shared vision,” commented Pierre Gramegna, Minister of Finance of the Grand-Duchy of Luxembourg.
“Investments that bring renewable energy solutions to households and small businesses in Africa can have a big impact by increasing access to electricity, lowering energy costs and improving power reliability to support growth and job creation in countries where access to power is often limited or too expensive,” said Sérgio Pimenta, IFC’s Vice President for the Middle East and Africa.
“Access to reliable electricity is a prerequisite for economic growth, job creation and development. Technology change is driving new business models that promote access to electricity. We are pleased to support responsAbility’s latest Fund providing debt finance to companies active in this area”, explained Mark Davis, Executive Vice President Clean Energy for Norfund.
“Sub-Saharan Africa and Southeast Asia are the regions with the highest energy deficit worldwide. Energy is an important precondition to economic development which is why we have set our main focus on improving access to reliable, clean energy. We are happy to continue to work with responsAbility who shares this goal and to help these regions unlock their vast solar power potential,” said Sabine Gaber, member of OeEB’s executive board.
“Snowball are delighted to be a founding investor in a fund which aims to help 6 million people secure improved access to clean energy while providing attractive potential returns. responsAbility have a track record in delivering off-grid solar, led by an experienced team. Snowball are building a diversified multi-asset portfolio across public and private markets to ensure investors do not have to choose between making a positive financial return and a positive impact. We are very happy to work with partners like responsAbility to make this a reality,” said Daniela Barone Soares, CEO of Snowball.
Sam Parker, Director at Shell Foundation, a UK charity, said: “responsAbility's first energy access fund, of which we were a founding investor, demonstrated their ability to successfully invest in this market and identify commercially viable high-impact opportunities. The pioneer fund has provided electricity access to more than 18 million people and contributed to the creation of 4,478 jobs, 32% of which are allocated to women. We are thrilled to be part of the further development of this investment approach helping to reach the 840 million people still living without access to affordable, reliable and modern energy services.”