Institutional investors bunch together to ensure green project funding stays on track
The Green Climate Fund may be in danger of becoming dormant following the United States’ announcement that it will renege on its commitments to the Paris Climate agreement, but local fund managers are already stepping into the void, garnering both the capital and the goodwill of other investors, to ensure adequate capital is available to fund green projects.
Earlier this week Sanlam Investment Holding announced it has partnered with several European institutional investors and African infrastructure fund specialists to establish a financing facility for investment in greeen projects and infrastructure.
Launched under the label, Climate Investor One, it is the inaugural financing facility established by Climate Fund Managers, for an intended series of climate finance initiatives to combat the detrimental effects of climate change.
Climate Investor One, a global climate fund, will provide expertise, technology and financing to renewable energy projects in developing countries by mobilizing private sector financing at scale supported by catalytic public sector donor funding.
Sanlam Investment Holdings said Climate Investor One is founded on the significant energy infrastructure expertise and track record of its sponsors, FMO, the Dutch development bank, and Phoenix InfraWorks, a South African infrastructure development and fund management specialists, in partnership with Sanlam Investment Holdings.
The fund will simplify the process of capital deployment and will reduce the typical complexity of this type of funding by delivering an innovative “whole-of-life” solution that provides a single financing source for each of the respective development, construction and operational phases of a project’s lifecycle.
To this end, Climate Investor One provides early-stage project development services and financing. Construction is financed through equity funding, and later through long-term debt once the project is operational. This approach will allow fund to bring more projects to market, faster, delivering positive environmental and social impact sooner.
The anchor investors in Climate Investor one comprise the Directorate-General for International Cooperation in the Ministry of Foreign Affairs of the Netherlands, Atradius Dutch State Business, De Nederlandse Waterschapsbank N.V. (NWB Bank), Aegon Asset Management and FMO – all from the Netherlands – together with global partners from Norway (KLP), South Africa (Sanlam Investment Holdings) and the UK (Royal Borough of Windsor & Maidenhead Pension Fund).
Targeting Africa, Asia and Latin America, Climate Investor One will focus on Solar, Wind and Run-of-River Hydro renewable energy projects.
Sanlam Investments Chief Executive, Robert Roux (pictured) said, “We are very pleased to be part of the innovative CIO initiative and are proud of the new partnership we have established with FMO and Phoenix through our participation in CIO. Energy, development and climate change are core issues for Africa, as well as the world, and we are excited about the purpose of CIO and the long term relationships we have established with other major institutions though CIO”
Andrew Johnstone, founder and CEO of Phoenix InfraWorks said at the first closing “CIO represents a new way of doing business enabling a wider spectrum of public and private sector investors to work together in pursuit of a common purpose of impact and financial return. CIO really is a new generation of financing and thinking, both of which are necessary ingredients for progress and climate change management”.
Johnstone was in Namibia on 09 May this year, telling a Namibian investors conference organised by EOS Capital, about the pitfalls and the expectations of funding large-scale infrastructure projects, and how to manage these highly specialised financing vehicles.