AFRICA – Asset management firm Eiffel Investment Group is partnering with investment advisory firm Finergreen to set up a financing mechanism for electrification and energy transition in Africa.
Initially, the fund will mobilize US$200 million for renewable energy professionals.
Already active in Europe, the new facility will focus on energy transition and electrification in Africa.
According to Eiffel, the initiative aims to address the growing demand for bridge financing in Africa.
“As is often the case, raising capital from international investors, multilateral organizations, development banks, and local partners can be a long and complex process. Also, the unavailability of long-term capital when projects are ready to enter the construction phase is a major factor in the slow deployment of renewable energy on the continent,” explained the investment company headed by Fabrice Dumonteil.
The facility will be launched in the first half of 2022.
Mobilizing US$200 million
The fund will provide bridge financing and this type of financing is intended to bridge the gap between an unforeseen event and a long-term financing solution to avoid a liquidity shortage
The demand for such a financing model is large, estimated at US$600 million per year according to data from the International Renewable Energy Agency (IRENA) and Bloomberg NEF, analyzed by Eiffel and Finergreen.
Eiffel was able to test the importance of this type of financing by granting a few months ago, US$3.42 million financing to ManoCap Energy for the deployment of renewable energy systems for productive use in Ghana and Sierra Leone.
Initially, the two partners will mobilize US$200 million exclusively dedicated to professionals in the renewable energy sector.
The fund will host financing from public and private institutions.
The European Investment Bank (EIB) is set to become the largest contributor to this fund dedicated to Africa with the European Union (EU) development bank having just launched the verification process to invest 30 million euros (US$34.3 million).
According to Eiffel, other European and international financial institutions are evaluating the possibility of contributing to the establishment of this mechanism for financing electrification via renewable energy in Africa.
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