Earlier this week, the French investment firm Rgreen Invest and the investment advisory business Echosys Invest announced the first close of their new Afrigreen Debt Impact Fund. After setting a goal of €100 million, the two firms ended up raising €87.5 million. Small and medium-sized commercial and industrial clients across Africa will benefit from the financing of both grid-connected and off-grid solar power facilities.
European Investment Bank (EIB), International Finance Corporation (IFC), Finland-IFC Blended Financing for Climate Program, Belgian Investment Company for Developing Countries (BIO), and Proparco all made commitments as part of the initial close. The initial fundraising round included participation from both Societe Generale and BNP Paribas.
According to Olivier Leruste, president of Echosys Invest, the joint venture that manages the investment strategy of the Afrigreen Debt Impact Fund, “Africa boasts 39% of the world’s total renewable potential, and yet investment in renewable energy has been lagging behind, for a set of reasons that include the lack of suitable financial instruments, which especially affects the most dynamic segment of the market, commercial and industrial solar users.”
Investing in renewable energy worldwide reached an all-time high in 2021, with BloombergNEF reporting a 9 percent year-on-year rise. Investments in renewable energy worldwide were down 35% in Africa, where they made up only 0.6% of the total. Direct lending and asset-based debt facilities are two ways in which Afrigreen plans to help regional and international developers and African commercial and industrial firms fill this financial shortfall, it has been said.
According to Rgreen Invest CEO Nicolas Rochon, “small and medium-sized organizations and industries,” which account for 90% of all businesses, have a hard time securing funding. We aim for a diverse portfolio of 20 to 30 investments with an average ticket size of €5 million spread out over a period of eight to ten years to cover our long-term debt financing needs of €10 to €15 million.
