Actis has closed its Energy Fund III on $1.15 billion, the emerging market firm announced today.
The fund, largely oversubscribed, surpassed its initial $750 million target by 50 percent. Investors have also committed an extra $262 million for potential co-investments alongside the vehicle.
Actis Energy III’s limited partner (LP) base comprises public pension funds, sovereign wealth funds and family offices from the US, Europe and Asia. The close was reached in less than nine months, Torbjorn Caesar, co-head of energy at Actis, told Infrastructure Investor.
The fund has a mandate to invest in electricity generation and distribution businesses in Latin America, Africa and Asia. It has already deployed $560 million – just shy of half its total size – through investments sealed earlier this year.
Last September, the firm paid $169 million for Atlantic Energias Renovaveis, a Brazilian renewable energy platform with 1.8 gigawatts (GW) of wind potential. This followed its $209 million investment last June in Aela Energía, a wind and solar electricity provider poised to become the country’s largest.
Two other deals – its November, $220 million investment in Cameroon’s national grid, as well as its agreement to acquire Veolia’s wastewater and electricity business for €370 million last March – are still pending regulatory approval.
“In emerging markets you have a growth of electricity consumption that is higher than GDP growth, yet the sector has been under invested for a number of years,” said Caesar. “And contrary to what you see in the OECD world, electricity there is a scarce commodity.”
The deal follows a string of other investments this year in the emerging market electricity space, whose fortunes are often buoyed by the growing energy needs of increasingly urban, fast-growing economies.
Only last week, Standard Chartered Private Equity invested $25 million in Indonesian power plant developer Navigat Group, while a consortium formed of Macquarie Group and Old Mutual reached financial close on a $150 million Kenyan wind park.
According to the U.S. Energy Information Administration, providing universal access to local populations means electricity generation in Latin America and the Caribbean will have to double by 2030, requiring an investment of more than $700 billion.
Mikkal E. Herberg, research director of of NBR's Energy Security Program, also estimates that China’s electricity use will rise by 240 percent over the next 25 years, while India’s needs will likely increase by 430 percent over the same period.
Actis was previously exposed to the sector via its 2008 vintage, $752 million Infrastructure Fund II. Flagship assets held in its portfolio have included Globeleq, a power business that has built up 4,000 megawatts in capacity over the last decade, and GVK, the first private power developer in India now aiming to generate about 4,400 MW in coal, gas and hydroelectric power.
The firm has deployed a total of $1 billion in the energy sector over the last decade.