Equity investment in specialist fund paves way for African Development Bank to take renewable projects from early stage to bankable
An equity investment by the African Development Bank targets the often difficult area of project finance for renewables. With this investment, the bank hopes to attract more financing from other sources to take renewable projects from early-stage planning to bankable study, and then to finance actual construction and commissioning of the projects.
The bank’s board announced this week is has approved a US$32.5 million equity investment in Climate Investor One (CIO), who manages a Construction Equity Fund that uses a unique blend of finance to cover the entire asset life cycle of viable renewable energy projects.
CIO will provide capital and technical assistance for early stage project development to ensure that bankable energy projects are delivered to the market; invest equity for the construction of projects; and provide debt at competitive terms. The Development Bank’s participation will be limited to investments within Africa.
The bank’s investment in the fund will be managed by Climate Fund Managers (CFM), a joint venture between the Netherlands Development Finance Company (FMO) and Sanlam InfraWorks. The bank said in a statement that the fund’s focus on investing in early stage project development will also assure the timely implementation of well-prepared projects.
Amadou Hott, the bank’s Vice President for Power, Energy, Climate Change and Green Growth said, “Significant investments are required to close the infrastructure gap and meet energy access goals. The bank’s investment in the Fund will complement its operations in the energy sector, and unlock at least an additional US$ 40 million of investments into Africa. With nearly 600 million Africans without access to energy, there is a huge market for the fund to invest and generate a return for its investors.”
Wale Shonibare, the bank’s Director of Energy Financial Solutions, Policy & Regulation, said they are playing a key role as knowledge repository for Africa, “enabling CFM to better gauge investment opportunities while ensuring that the highest environmental and social standards are applied to the CEF’s projects.”
Climate Investor One aligns with the bank’s New Deal on Energy and the High 5 priorities to ‘Light up and Power Africa’, and ‘Improve the quality of lives of Africans’.
“The CEF will have a measurable social and environmental impact by supporting the establishment of clean energy projects in developing markets, by creating jobs and by providing access to electricity in an under-developed market,” the bank stated.