Helios Investment Partners LLP and Gaia Fund Managers are raising hundreds of millions of dollars for Africa-focused climate funds to take advantage of the opportunities to invest in renewable energy and drought-resistant agriculture on the continent.
Helios — the biggest Africa-focused private-investment firm — won about $200 million from eight state-linked institutions in a first step to create the biggest Africa-focused climate fund, investors in the fund said Wednesday. Gaia of South Africa said its secured $50 million in commitments toward its Luxembourg-based Gaia Africa Climate Fund, which has a target of $200 million.
Investors are stepping up their interest in Africa, where the lack of power infrastructure has deprived 600 million people from access to electricity but presents the opportunity for large-scale investment in renewable-energy plants without incurring the cost of retiring fossil fuel-fired facilities. At the same time, the increasing severity of droughts has boosted demand for irrigation and technologies to reduce water use for agriculture, upon which most Africans rely.
“Africa must overcome a significant climate-financing gap to realize its climate transition and the substantial investment opportunities it presents,” Ross Ferguson, the leader of the UK’s Foreign, Commonwealth and Development Office’s Mobilist investment program, said in the statement about the Helios fund.
Allianz, M&G
Helios’ Climate, Energy Access and Resilience Fund, known as Clear, has a target size of $400 million, which would make it the biggest Africa-focused climate fund.
Initial funding came from the UK’s FCDO and the Private Infrastructure Development Group’s InfraCo Africa Ltd. unit. Groups including the European Investment Bank, British International Investment, Dutch Development Bank and the Swiss Investment Fund for Emerging Markets have also committed money.
M&G Plc’s responsAbility Investments AG advises the Swiss fund while the EIB fund that committed funds is managed by a unit of Allianz SE.
Clear will invest in African companies focused on green energy, transport and agriculture as well as recycling and efficiency in using resources.
“The UK-supported Clear fund is the first of its kind to invest in mid-sized African companies seeking to avoid and reduce carbon emissions,” UK Development Minister Anneliese Dodds said in the statement.
Gaia’s fund will operate as a so-called yieldco, which invests in renewable-energy plants in sub-Saharan Africa that are already in use to benefit from stable revenue flows and to free up money for developers to build new facilities, Managing Director Renier de Wit said in an interview. It will also invest in power-transmission assets.
While domiciled in Luxembourg, it will also list vehicles on Kenya and Botswana’s stock exchanges to ensure indirect access for institutional and pension-fund investors from those countries.
A Wood Mackenzie Ltd. study backed by South Africa’s Revego Fund Managers and Mobilist a $193 billion investment opportunity in renewable-energy plants and power grids in sub-Saharan Africa by 2031.
Revego, which also operates a yieldco fund, is currently seeking about 3 billion rand ($164 million) to invest in projects and add to its current 2 billion-rand portfolio.
– Bloomberg
