French fund manager Rgreen Invest and green energy investment advisor Echosys Invest have closed a new fund with the aim of financing solar power generation across Africa. The investment fund named Afrigreen Debt Impact Fund has raised a capital of €87.5 million (~ $92.9 million).
The green fund will be used to finance on- and off-grid solar energy installations for small and medium-sized commercial and industrial (C&I) consumers in Africa, mostly in West and Central Africa. It will provide direct lending and asset-based debt facilities for the customers along with the regional and international solar infrastructure developers.
The initial closure of the Afrigreen Debt Impact Fund includes a commitment from the European Investment Bank (EIB), International Finance Corporation (IFC), Belgian Investment Company for Developing Countries (BIO), and PROPARCO, the subsidiary of the French Development Agency. The green energy fund has targeted to raise a total of €100 million from development finance institutions and private investors.
The Afrigreen fund will utilise IDA’s Private Sector Window Local Currency Facility to offer long-term financing for Nigeria and Ghana. This will enable the green fund to significantly reduce its foreign exchange risk and materially increase competitiveness.
According to Olivier Leruste, Echosys Invest’s President, the investment in renewable energy in Africa has been lagging behind although the continent has 39% of the world’s total renewable potential. The primary reason includes the lack of suitable financial instruments, which especially affects the C&I solar users.
Nicolas Rochon, CEO of Rgreen Invest, said, the new fund intends to deepen the partnership with the development partners to provide most SMEs in Africa with the necessary backing. The fund targets a diversified portfolio comprising 20 to 30 investments, intervening to meet long-term debt financing of around €10 and €15 million, with an average ticket of €5 million over 8 to 10 years.
The impact targets of the fund will be measured in terms of the capacity of MW installed, energy in MWh produced, tons of carbon emissions, and amount of fuel avoided. It will also be measured in the number of C&I companies able to upgrade their solar energy facilities and enhance their energy.
Afrigreen fund will also apply IFC Performance Standards and EIB Environmental and Social Standards that are necessary to monitor its socio-economic and environmental impact by screening, categorizing, and conducting due diligence on its investments.