African Renewable Energy Fund launches with $100 mn capital
The fund will target independent power producers with an ideal size of between 5MW-50MW and a commitment per project of between USD 10 million–USD 30 million. (Image: AREF)
A towering USD100M of funding focused on Sub-Saharan Africa has been committed to support small to medium-scale independent power producers (IPPs), through the AfDB led African Renewable Energy Fund (AREF).
“As Africa’s largest infrastructure finance partner, we understand the value of supporting both large-scale and small-scale projects as part of our strategy for Africa to promote inclusive and sustainable growth,” said AfDB Regional Director of the Eastern Africa Resource Center Gabriel Negatu.
The fund will target IPPs with an ideal size of between 5MW-50MW and a commitment per project of between USD 10 million–USD 30 million with a capacity to source further funding from co-investors, where necessary for a larger investment.
Launched on March 13, 2014, the fund will be headquartered in Nairobi and is targeting a final close of USD200 million within the next 12 months to be invested in grid-connected development stage renewable energy projects, namely small hydro, wind, geothermal, solar, biomass and waste gas.
Initially promoted as a joint initiative of the African Biofuel and Renewable Energy Company (ABREC) and the African Development Bank (AfDB), the AREF will be managed by Berkeley Energy Africa Limited (Berkeley Energy), a renewable energy fund manager focused on developing and investing in renewable energy projects in emerging markets.
AfDB selected Berkeley Energy as the fund manager of AREF following a competitive procedure.
Berkeley Energy, based in Mauritius, will have operational headquarters in Nairobi and a further office to be situated in West Africa.
The investor group also includes West African Development Bank (BOAD), Ecowas Bank for Investment and Development (EBID), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Calvert Foundation, Berkeley Energy and ABREC, who are the vision bearers of the fund.
“We believe Berkeley is well placed to play a leading role in further developing the nascent, but vibrant renewable energy sector in Africa. We are also impressed with the leading role the African Development Bank played in promoting the Fund, which brings together private and public investors from Africa, the United States and Europe in an exciting First Close.” Said FMO Chief Executive Officer Nanno Kleiterp.
The Berkeley Energy team and investment committee comprises Managing Partner TC Kundi; Partner Alastair Vere Nicoll; Chairman Andrew Reicher; Investment Director and AREF lead Luka Buljan; 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).
“The launch of a first pan-African dedicated renewable energy fund, with a centre of gravity in Africa, sourcing a majority of its capital from Africa at an exciting time in the evolution of macro-economic factors in Africa’s favour, presents a propitious environment for the investment of AREF,” said Berkeley Energy’s Managing Partner TC Kundi.
“We aim to use Berkeley Energy’s technical and financial experience to ensure that a part of Africa’s growing need for power is met through responsibly developed clean energy projects that improve the generation mix and maximise the use of local resources,” Kundi added.
For Bassary Touré, Vice-Chairman of BOAD, “Populations’ access to clean and renewable energy sources is one of the key objectives set by BOAD. Hence, this equity investment in AREF’s capital will help increase BOAD’s action in the area.”
Owned by 15 African Nations and 5 financial institutions, ABREC is a company specialized in developing, managing and advising public and private sector renewable energy and energy efficiency initiatives and projects.