A new $300 million (R4.8 billion) fund has been formed to aid in the acceleration of renewable energy adoption throughout Africa. The Pan-African Renewable Energy Fund (PAREF) is supported by infrastructure investment firm Harith General Partners and energy business Anergi Group . Harith and Anergi have been collaborating for the past 13 years to develop and invest in African power projects, according to Emile du Toit, Harith’s managing director of fundraising and liabilities.
Harith manages the Pan-African Infrastructure Development Funds, which own Anergi. Electricity plants in Sub-Saharan Africa are developed, operated, and owned by the power company. Harith is also well-known for being the biggest shareholder in the Takatso Consortium, the government’s strategic equity partner for SAA.
Read also Nigerian B2B Marketplace Betastore Raises $2.5M To Help Informal Businesses With Stock-Outs, Funding
Harith and Anergi formed the cooperation to address Africa’s energy accessibility problem. According to the International Energy Agency’s most recent Africa Energy Outlook study, 600 million Africans, or 43 percent of the population, lack access to electricity. The bulk, 590 million, live in Sub-Saharan Africa. To close this gap, $25 billion needs be invested in modern and affordable housing every year until 2030.
Here Is What You Need To Know
- Harith’s duty in the new venture is to administer the fund and recruit investors. According to Du Toit, Anergi adds project development knowledge and services to the cooperation. “Anergi has a project development team with a pipeline of investments as well as expertise and experience in the African setting to launch new energy projects and develop them from concept to bankability,” he said.
- Harith will meet with potential investors over the next six weeks, according to Du Toit. Harith intends to attract a diverse range of investors, including both South African institutional investors such as pension funds and development financing organisations and international investors. “We have a reasonably long list of potential investors, most of whom are European,” Du Toit added. He explained that the majority of renewable energy financing comes from the United States and Europe.
- The fund would most likely have a 10- to 12-year life, with returns ranging from 8% to 12% depending on the investment, he explained.
- According to Du Toit, the fund provides for investments in new renewable energy projects, expansion of current renewable projects, and conversion of thermal projects such as coal and gas to renewables such as wind and solar. These initiatives could offer returns between 10 percent and 12 percent.
- The fund can also help with secondary investments, such as purchasing a stake in a renewable energy project. These investments could generate yields ranging from 8% to 10%.
- PAREF is also interested in funding innovative technologies such as battery storage and renewable hydrogen, according to Du Toit. He anticipates that the fund will make 10 to 12 large investments.
- The primary goal is to provide equity to renewable energy developers (between 30 percent and 60 percent ). The fund will then help developers secure debt from other banks and development finance institutions to satisfy the remaining project financing needs.
“PAREF is an important and urgent response to climate change — by accelerating Africa’s race to net zero, transitioning to a low carbon future and connecting millions of Africans to sustainable, green energy,” said Harith CEO Sipho Makhubela.
“We are fully committed to utilising our project development experience, expertise and resources to convert our pipeline of renewable opportunities into operational assets that provide secure, affordable and lower carbon sources of power supply to individuals and industries across the African continent,” Anergi Group acting CEO Neil Hopkins, said, noting the significance of the fund in assisting the energy transition across Africa.
PAREF Fund Africa PAREF Fund Africa
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh