The fund is seeking to inject investment into businesses addressing the energy transition in Africa, as the continent continues to face a massive funding gap in the renewables sector.
An Africa-focused climate fund managed by Helios Investment Partners has reached a first close of £200m (€235m) on the way to a target size of £400m, with contributions from a number of European development finance institutions.
The Helios Climate, Energy Access and Resilience (CLEAR) fund has been set up to invest via equity and quasi-equity in African businesses in five areas: green energy, climate-smart agriculture and food, green mobility and logistics, recycling and resource efficiency, and digital and financial climate enablers.
Investors include British International Investment, the European Investment Bank (EIB), Dutch DFI FMO, the Swiss Investment Fund for Emerging Markets (SIFEM) and the Emerging Markets Climate Action Fund (EMCAF). SIFEM is advised by Swiss-based asset manager responsAbility, while EMCAF is a managed by Allianz Global Investors and advised by the EIB.
London-based Helios says it is the largest Africa-focused private investment firm, managing funds totalling $3bn. If the new fund hits its $400m target size, it will become the largest Africa-focused climate fund, according to the investor group.
Anneliese Dodds, the UK’s development minister, described the fund as “a first of its kind to invest in mid-sized African companies seeking to avoid and reduce carbon emissions, helping people to become more resilient and to adapt to the climate crisis”.
Catalytic capital
The fund was established with the help of catalytic backing from the InfraCo Africa arm of the Private Infrastructure Development Group (PIDG) and the MOBILIST programme of the UK’s foreign ministry, the Foreign, Commonwealth and Development Office. PIDG is a DFI and multilateral-owned infrastructure investor.
Gilles Vaes, InfraCo Africa’s chief executive officer, said the announcement of the fund’s first close was a “watershed moment for African growth businesses, and the associated infrastructure, seeking to address the climate crisis”.
“CLEAR will unlock much-needed access to finance and exit routes for climate entrepreneurs whilst giving investors comfort that their investments will generate the growth they expect and support global efforts to address climate change, in line with the PIDG strategy, which was launched in 2023,” he said.
Africa is faced with a massive financing gap for renewable energy investment. Cumulative renewable energy investment in sub-Saharan Africa since 2010 has totalled only $37bn, roughly 12-15% of estimated overall financing needed for the continent’s energy transition, according to a recently published report from consultancy Wood Mackenzie, which was commissioned by MOBILIST and renewables investor Revego.
However, the authors estimate sub-Saharan Africa’s market for renewable energy projects and the associated power grids represents a total addressable investment opportunity of $193bn in the period 2023-31, with indicative internal rates of return for new built utility-scale assets of around 15-21%. Those returns exceed sovereign bond yields and weighted average cost of capital by “notable margins”, according to the report.
