The Africa Renewable Energy Fund II (AREF) whose primary goal is investing in early stage renewable energy projects has achieved its first close at €130 million, African Development Bank (AfDB) has announced.
First close basically means that when a certain threshold of money has been raised, the private equity firm can begin making investments and actually closing deals and new limited partners can still join in by committing capital for a limited time.
The move follows a joint investment of €17,5 million from The Sustainable Energy Fund for Africa and the Climate Technology Fund through the African Development Bank.
In 2012, the African Development Bank selected Berkeley Energy, a seasoned fund manager of clean energy projects in global emerging markets to set up AREF.
AREF II, a successor to the original Fund, is a 10-year closed-ended renewable energy Private Equity Fund with a $300 million target capitalization.
The Africa Renewable Energy Fund II, managed by Berkeley Energy, invests in early-stage renewable energy projects, thereby not only de-risking the most uncertain phase of power projects, but also promoting increased green base load in Africa’s generation mix.
The Sustainable Energy Fund for Africa and the Climate Technology Fund will each contribute roughly €8,7 million to mobilize private-sector investment into Africa’s renewable energy sector. The Sustainable Energy Fund for Africa will also contribute financing to the AREF II Project Support Facility, which funds technical assistance and early-stage project support to improve bankability.
The other investors are the United Kingdom’s CDC Group, Italy’s CDP, the Netherlands Development Finance Company (FMO), SwedFund and Proparco.
“We are proud to be associated with Berkeley Energy and other like-minded investors, and look forward to AREF’s continued success and leadership in promoting sustainable power development on the continent,” said Kevin Kariuki, the African Development Bank’s Vice President for Power, Energy, Climate and Green Growth.
AREF II has a sharper strategic focus than its predecessor on green base load projects that will deliver firm and dispatch able power to African power systems through hydro, solar, wind and battery storage technologies.
Berkeley Energy’s Managing Director Luka Buljan said was now looking forward to concluding the fundraising and delivering projects that will provide clean, reliable and affordable energy across African markets
“We are very excited to have reached this milestone with strong support from our backers. The catalytic tranche from the Sustainable Energy Fund for Africa and the Climate Technology Fund will assist in mobilising private institutional investors up to full fund size of €300 million. We now look forward to concluding the fundraising and delivering projects that will provide clean, reliable and affordable energy across African markets,” Buljan said.
Joao Duarte Cunha, Manager for Renewable Energy Initiatives at the African Development Bank and Coordinator of the Sustainable Energy Fund for Africa said looks forward to continued collaboration to accelerate the energy transition in Africa
“AREF is intertwined with the Sustainable Energy Fund for Africa’s history and success, and we have worked closely over the last decade to create precedents in difficult markets and challenging technologies. We look forward to continued collaboration to accelerate the energy transition in Africa, ”Cunha said.