ARCH eyes institutionals for half of $250m African renewables fund

A first close is expected in Q1 this year, with commitments from the AfDB, EIB and a South African pension fund.

London-based ARCH Emerging Markets Partners is planning to add over 500MW of new renewable energy capacity in Africa with the launch of a $250 million fund.

The ARCH Africa Renewable Power Fund received a $25 million commitment from the African Development Bank and is expecting a first close in the first quarter of this year, with additional investments from the European Investment Bank and the 85 billion rand ($6.2 billion; €5.4 billion) South African pension Sentinel Retirement Fund, according to an AfDB statement and related documents.

ARCH is expecting to close the fund by year end and expects an investor mix comprising 50 percent institutional investors and 50 percent development finance institutions, a spokeswoman for ARCH told Infrastructure Investor.

Some 533MW of new renewables projects are expected to be added through the finance and construction of between 10 and 15 wind, solar PV, small to medium hydro, geothermal and biomass projects across sub-Saharan Africa by the fund. The vehicle is aiming for 25 percent gross returns from the investments, resulting in 16 percent net, the spokeswoman added.

“The fund’s strategy is to prioritise projects with a clear timeline to financial close, with emphasis on de-risking early stage greenfield projects,” the AfDB said in its statement.

ARCH Emerging Markets Partners was formed last year by African Rainbow Capital Proprietary and US-based JCH & Partners, which describes itself as “a collaboration of companies with the common goal of sustainable solutions”. The renewables platform is led by William Barry and David Anson, both formerly of infrastructure developer eleQtra.