AFRELEC: Africa Renewable Energy Fund II raises €130mn

The Africa Renewable Energy Fund II, an Africa-focused private equity fund, has achieved its first close at €130mn, following a joint investment of €17.5mn from The Sustainable Energy Fund for Africa and the Climate Technology Fund through the African Development Bank (AfDB).

The fund is a 10-year closed-ended renewable energy Private Equity Fund that aims to raise $300mn from private institutional investors.

AREF II, which is managed by Berkeley Energy, invests in early-stage renewable energy projects, thereby not only de-risking the most uncertain phase of power projects, but also promoting increased green baseload in Africa’s generation mix.

AREF II has a sharper strategic focus than its predecessor on “green baseload” projects that will deliver firm and dispatchable power to African power systems through hydro, solar, wind and battery storage technologies. 

The Sustainable Energy Fund for Africa and the Climate Technology Fund will each contribute roughly €8.7mn to mobilise private-sector investment into Africa’s renewable energy sector.

The Sustainable Energy Fund for Africa will also contribute financing to the AREF II Project Support Facility, which funds technical assistance and early-stage project support to improve bankability.

Other investors include the UK’s CDC Group, Italy’s CDP, the Netherlands Development Finance Company (FMO) and SwedFund.  

“We are proud to be associated with Berkeley Energy and other like-minded investors, and look forward to AREF’s continued success and leadership in promoting sustainable power development on the continent,” said Dr. Kevin Kariuki, the AfDB’s Vice President for Power, Energy, Climate and Green Growth.

In 2012, the AfDB selected Berkeley Energy, a seasoned fund manager of clean energy projects in global emerging markets, to set up AREF.

Luka Buljan, Berkeley Energy’s managing director, said: “We are very excited to have reached this milestone with strong support from our backers. The catalytic tranche from the Sustainable Energy Fund for Africa and the Climate Technology Fund will assist in mobilising private institutional investors up to full fund size of €300mn. We now look forward to concluding the fundraising and delivering projects that will provide clean, reliable and affordable energy across African markets.”

“AREF is intertwined with the Sustainable Energy Fund for Africa’s history and success, and we have worked closely over the last decade to create precedents in difficult markets and challenging technologies. We look forward to continued collaboration to accelerate the energy transition in Africa,” said Joao Duarte Cunha, manager for Renewable Energy Initiatives at the AfDB and Coordinator of the Sustainable Energy Fund for Africa.