Scatec ASA’s subsidiary, Release has recently signed a significant agreement to raise $102 million (NOK 1 billion) in funding from Climate Fund Managers (CFM). The funding aims to provide a substantial boost to Release’s growth ambitions. Established in 2019 by Scatec, Release specializes in offering a flexible leasing solution for pre-assembled and modular solar and battery equipment, catering specifically to the mining and utilities market.
CFM, a climate-centric blended finance fund manager backed by FMO (the Dutch Development Bank) and Sanlam Infraworks, has invested in Release through its Climate Investor One (CIO) fund. The CIO fund focuses on renewable energy infrastructure in emerging markets and will contribute $55 million in equity for a 32% stake in Release. Scatec will retain the majority shareholding of 68%. Additionally, CFM will provide shareholder loans totaling $47 million, with some of the loans on concessional terms.
Scatec CEO, Terje Pilskog, who also serves as the Chair of Release, expressed excitement about the partnership with Climate Fund Managers, stating, “We are very excited to have Climate Fund Managers join us as a partner to accelerate the significant growth potential of the Release platform. Scatec is establishing a strong partnership and has raised external financing through a value accretive transaction to fund Release’s growth ambitions. Release is offering a unique renewable energy solution in a rapidly growing market segment that requires a different business model than Scatec’s larger-scale project business. Today’s transaction establishes Release as a strong and independent company while Scatec remains the main shareholder and offers services to support Release and drive synergies in the next phase of the company’s development.”
With projects already in operation and under construction in Cameroon, South Africa, Mexico, and South Sudan, Release has demonstrated strong traction in the market, particularly among African utilities. The company has a total capacity of 47 MW solar PV and 20 MWh of battery storage, along with additional contracts for 35 MW solar PV and 20 MWh of storage in Chad. Release plans to replicate its rapid deployment model to address power supply shortfalls in the local grid throughout the region.
Release CEO, Hans Olav Kvalvaag, emphasized the significance of CFM’s support, commenting, “We are excited to have a partner as strong as CFM on board and one who shares our view of the potential and aspirations for our business concept. The new shareholder funding will be supplemented by Release through additional debt and guarantee facilities that are currently in advanced negotiations. This gives us the financial foundation we need to meet the strong demand for our flexible leasing model, for easily deployable renewable power plants.”
“CFM’s purpose is to help end the climate crisis. We do this by raising and deploying cutting-edge blended finance funds at scale and at pace. Our blended finance model facilitated the integration of impact finance into the deal structure, which Release will be able to leverage to improve its cost structure for its battery and grid connection solutions, allowing Release to offer even more competitive pricing and better value to its clients. We are delighted to support the Release team as they roll out their critical climate technology across Africa, helping significantly reduce the emissions of the mining and utility sectors,” commented CFM CEO, Andrew Johnstone.
Rand Merchant Bank (RMB) acted as the sole financial advisor to Scatec on the transaction. Following the closing of the transaction, Release will be accounted for as a joint venture investment in Scatec’s group accounts, generating an accounting gain of approximately $40 million in the consolidated financials. There will be no impact on the proportionate financials from the transaction. The closing of the transaction is expected in the third quarter of 2023, subject to customary conditions precedent.