Start-up ‘impact’ fund targets €400m for Africa

Merchant bank NextEnergy is raising ix:Africa, a socially responsible fund seeking to invest in ‘green’ infrastructure throughout Africa. NextEnergy and South Africa’s IDC are providing seed capital, kicking off a fundraise that should last between 12 and 18 months.

A start-up socially responsible fund established to invest in Africa – know as ix:Africa –  is gearing up to raise €400 million through 2012.

NextEnergy Capital, a merchant bank specialising in renewable energy and clean technology financing, is raising ix:Africa. A spokesman for the fund described it as a private equity style vehicle dedicated to renewable energy, environmental business and clean technology, dubbing it an “ethical” investment fund.

The fund has already secured seed capital from NextEnergy Capital and South Africa’s Industrial Development Corporation (IDC) to develop a solar energy project in South Africa that is being touted as  ix:Africa's flagship investment.

The €18 million flagship project will be located in the Waterberg district of South Africa, a 300-kilometre northward trek from Johannesburg, with ix:Africa owning 57 percent of the facility and IDC owning the remainder. Once completed, the project will be able to deliver power to 500,000 people.

ix:Africa is targeting investors from Europe, the US and South Africa, via a subsidiary Rand fund. It plans to allocate 80 percent of its capital to 'permitted power generation' projects, which are required to report their emissions and toxic pollution on a quarterly basis. The remaining 20 percent of the fund will be deployed to 'pre-permit' power plant development and to prepare early-stage clean technology for the market.

A portion of the investment return will be doled out to a charitable foundation as well as food, housing and health project development, according to ix:Africa.

NextEnergy Capital characterises ix:Africa as an “impact” investment, a buzzword for ethical and environmentally minded investment. A 2009 report from JPMorgan Chase called impact investing an asset class, noting total capital for it could top $1 trillion over the next decade.