Climate debt fund raises $151m for clean energy in emerging markets

The fund will lend money to firms offering access to clean energy solutions for both households and business in emerging markets.

Swiss impact manager responsAbility Investments has held a first close on a private debt fund focused on expanding energy access in emerging markets.

The responsAbility Access to Clean Power Fund has already raised $151 million from a number of institutional investor partners. It has a hard cap of $200 million, which it hopes to achieve later in 2020, sister publication Private Debt Investor reported.

The debt vehicle will address a lack of access to clean power globally with a particularly strong focus on sub-Saharan Africa and South and South-East Asia. It will target companies that provide solutions for households without access to electricity or businesses looking for cleaner, cheaper and more reliable energy. responsAbility claims it is the first investment fund of its type to actively address solar potential for the commercial and industrial sector.

It will target average financings of $6 million with durations of three to five years for energy access companies and six to eight years for companies offering distributed generation to SMEs and commercial and industrial customers.

The fund is incorporated in Luxembourg with a fixed 10-year lifespan. Over its lifetime its portfolio companies are expected to provide clean power to more than 150 million people and add 2,000MW of clean energy generation capacity, reducing carbon dioxide emissions by six million tonnes.

Antoine Prédour, who oversees responsAbility’s energy debt financing activities, said: “By partnering with entrepreneurs as a first commercial lender, we want to enable clean energy businesses to scale up their activities and attract more funding in the long run.”

The fund is set up as a blended finance structure and is divided into four different risk tranches: junior, mezzanine, sub-senior and senior.

Partners on the project include AHL Venture Partners, Ashden Trust, Bank of America, Bohemian Impact Investments, Calvert Impact Capital, Clean Technology Fund, European Investment Bank, Facebook, Dutch development bank FMO, Good Energies Foundation, the government of Luxembourg, International Finance Corporation, Norfund, Austrian development bank OeEB, Shell Foundation, Snowball and the UK Department for International Development.

Emma Navarro, vice-president of the EIB, said its “investment in the fund is a clear demonstration of our commitment to sustainable energy access. By providing debt to companies supplying off-grid and distributed energy generation solutions to households and SMEs, the fund will fill an important financing gap in a sector that is essential to achieving both economic and social development”.