African renewable energy fund reaches $200m investment target

TOWARDS supporting sustainable private-sector led economic growth, the African Renewable Energy Fund (AREF), a dedicated renewable energy fund focused on sub-Saharan Africa, announced that it successfully reached its final close at its hard cap, with US $200 million of committed capital to support small- to medium-scale projects.

Among other investors at the final close are European Investment Bank (EIB) and the Global Energy Efficiency and Renewable Energy Fund (GEEREF).

The African Development Bank (AFDB) and its Sustainable Energy Fund for Africa (SEFA) are the fund’s lead sponsors, with equity investment of US $25 million and US $25.5 million, respectively, alongside US $4.5 million from the Global Environment Facility (GEF). SEFA has additionally committed a US $10-million Project Support Facility (PSF) to be deployed at an early stage to structure bankable deals. The total AfDB-mobilized package of US $65 million has provided a solid foundation for attracting capital from commercial and institutional investors to the renewable energy segment in Africa.

The fund, which is headquartered in Nairobi, held its first close of $100 million in March 2014 and since that time has been investing capital in grid-connected development stage renewable energy projects, including small hydro, wind, geothermal, solar and biomass projects.

AREF is the first dedicated sub-Saharan African renewable energy fund and is managed by Berkeley Energy, a fund manager focused on developing and investing in renewable energy projects in emerging markets. Berkeley Energy also manages dedicated renewable energy funds in Asia. Berkeley Energy has more than 30 staff in five offices globally, shortly expanding into West Africa.

The final investor group also includes West African Development Bank (BOAD), ECOWAS Bank for Investment and Development (EBID), The Netherland Development Finance Company (FMO), Calvert Investments, the UK’s Development Finance Institution called CDC Group, the Belgian Investment Company for Developing Countries (BIO), OeEB – the Development Bank of Austria, Wallace Global Fund, Sonen Capital, Berkeley Energy, African Biofuel and Renewable Energy Company (ABREC) and now the European Investment Bank, the Global Energy Efficiency and Renewable Energy Fund, and a number of other private investors.

AfDB had originally selected Berkeley Energy as the fund manager for AREF following a global competitive procedure and with the fund having reached its hard cap as well as successfully closing a number of transactions in its initial period, Berkeley Energy has justified the AfDB’s selection. The Berkeley Energy team comprises Managing Partner TC Kundi; Partner Alastair Vere Nicoll; Chairman Andrew Reicher; Investment Director and AREF lead Luka Buljan, Project Director David Hastings; and Investment Committee members Thierno Bocar Tall, Chief Executive Officer of ABREC; and Eddie Njoroge, former Chief Executive Officer of Kenya Electricity Generating Company (Kengen).

Berkeley Energy’s Partner and Co-Founder, Alastair Vere Nicoll said: “We are very pleased to have reached our target fund raising and look forward to continuing our work focusing on the technical delivery of our projects with our project partners from concept to generating reality”.

“AfDB is pleased to see that AREF is now fully capitalised to deliver on its pan-African mandate. We are also equally excited that SEFA and Global Environment Facility participation have been catalytic in mobilizing significant amounts of commercial capital into AREF over a short time-frame; this is key for accelerating deployment of modern, clean and affordable energy in the continent,” said Alex Rugamba, Director of AfDB’s Energy, Environment and Climate Change Department.

“As one of the world’s largest investors in renewable energy, the European Investment Bank is committed to ensuring that new projects can be implemented around the world. This engagement is demonstrated through our support for the Global Energy Efficiency and Renewable Energy Fund, GEEREF. Our combined backing for the African Renewable Energy Fund will provide both financial support and share technical experience essential for smaller renewable schemes being implemented for the first time,” said Pim van Ballekom, European Investment Bank Vice-President.

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
GEEREF is an innovative Fund of Funds investing in specialist private equity funds focusing on small and medium-sized renewable energy and energy efficiency projects in emerging markets. GEEREF was launched in 2008 with public sector seed capital from the European Union, the Federal Republic of Germany and the Kingdom of Norway, and has recently successfully completed its fundraising from private sector investors. GEEREF is advised by the European Investment Bank Group. This partnership is partly financed with the financial assistance of the European Union, the Federal Republic of Germany and the Kingdom of Norway. The views expressed herein can in no way be taken to reflect the official opinion of the European Union, the Federal Republic of Germany and the Kingdom of Norway.
SEFA is a US $90-million multi-donor facility hosted by the African Development Bank and funded by the governments of Denmark, the United Kingdom and the United States. It unlocks private investments in the sustainable energy agenda in Africa through: grants to facilitate the preparation of medium-scale renewable energy generation and energy efficiency projects; equity investments to bridge the financing gap for small- and medium-scale renewable energy generation projects; and support to the public sector to improve the enabling environment.