GreenCape launches US$27m investment fund to grow green SMMEs

SOUTH AFRICA – GreenCape, a non-profit organisation that drives the widespread adoption of economically viable green economy solutions and the National Treasury have launched a ZAR488 million (US$26.9 million) Green Outcomes Fund (GOF) in a bid to incentivise South African fund managers to increase investment in green Small, Medium and Micro-sized Enterprises (SMMEs). 

Greencape provides outcome-based matched funding to local investment funds to support investments into local SMMEs that make a demonstrable contribution to South Africa’s green economy, as well as job and enterprise creation in priority impact areas.  

The fund has been made possible by catalytic grant support from the RMB Fund, a division of the FirstRand Foundation, while local catalytic finance partners are Mergence Investment Managers, Edge Growth Ventures, Conservation International Ventures and Business Partners South Africa

These local catalytic finance partners will be incentivised by the Green Outcomes Fund to invest in green businesses, as well as track verifiable green metrics. Investment funds partnering with the fund can choose from a portfolio of green outcomes metrics, developed in line with international impact investing standards, when selecting green SMMEs to invest in. 

“We seek to be a catalyst for innovation and investment in activities which directly contribute to sustainable job creation initiatives, as well as long term employment creation in the green economy.

“This initiative will also provide the Jobs Fund with valuable learnings and appealed to us as public funds will only be triggered by the delivery of independently verified jobs,” said Najwah Allie-Edries, head of the Jobs Fund

Megan van Vlaanderen, chief financial officer (CFO) of GreenCape, said the Green Outcomes Fund aims to achieve clearly defined green outcomes, encourage greater capital allocation to green businesses by local fund managers, and catalyse increased and higher quality, consistent, reporting of green impacts. 

Mark van Wyk: Head: Unlisted Investments, Mergence Investment Managers, said: “At Mergence we believe the timing could not be better as the world is surely set to emerge from the COVID-19 pandemic as a different place with populations more conscious of protecting the environment, economic sustainability and job creation.” 

“As an incentive to the Catalyst Fund Managers, the GOB funding assists fund managers to either reduce risk by compensating with additional returns for jobs created and specific post-investment support, as well as monitoring and evaluation of the businesses. This will allow for green businesses to scale to the critical size required to be sustainable,” he added. 

The Green Outcomes Fund (GOF), in partnership with the Jobs Fund, will incentivise the local catalytic finance partners that it has partnered with to invest in green businesses, as well as track verifiable green metrics. 

Investment funds partnering with the GOF can choose from a portfolio of green outcomes metrics when selecting green SMMEs to invest in. The green outcomes have been developed in line with international impact investing standards.  

UCT GSB’s Bertha Centre for Social Innovation led the design and fundraising for the Green Outcomes Fund development and continues as the primary knowledge partner. 

“We are excited about the ground-breaking role of the GOF in demonstrating an innovative financial model that combines de-risking SMME investing with demonstrated positive social and environmental impact.

“It’s a first of its kind in the international impact investing landscape and we are thrilled to launch this unique blended finance partnership in South Africa, which is made possible through local contributions only,” said Tine Fisker Henriksen, Innovative Finance Lead, Bertha Centre for Social Innovation. 

The Green Outcomes Fund is the result of a World Bank Climate Technology Program pilot initiated in 2016, with the Bertha Centre, GreenCape and WWF-SA as the main design partners, set out to test whether a green outcomes-based impact investing fund of funds mechanism would stimulate growth in the South African green economy

The Green Outcomes Fund is aligned with the UN’s Sustainable Development Goals (SDGs) and mobilises private capital in support of these global goals. In addition to the founding members and funders, the GOF has attracted external experts to serve on the Advisory and Investment Committees. 

These include Jonathan First (Managing Director GFA Climate and Infrastructure), Itumeleng Merafe (Head of Structuring, Investec) and Monique Mathys Graaff (Senior Advisor, Impact Management Project). 

The partnership with the Jobs Fund is managed by GreenCape, a South African non-profit organisation that drives the widespread adoption of economically viable green economy solutions. 

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