SF and ResponsAbility launch new financial vehicle to scale off-grid energy enterprises

Innovative investment fund launched to accelerate access to off-grid energy solutions

On 31 March 2015, responsAbility Investments AG launched a new investment fund in collaboration with founding partner Shell Foundation and anchor investor IFC, a member of the World Bank Group.

Swiss based responsAbility is an asset manager specialising in development investments and the fund is dedicated to providing debt financing to fast-growing companies which promote access to decentralised modern energy solutions, primarily in Africa and Asia.

The fund is expected to impact the lives of nearly 20 million people

Simon Desjardins, Access to Energy Portfolio Director at Shell Foundation, said: “This fund is not only serving a critical need in the market but will also generate a significant economic, social and environmental impact. The fund is expected to impact the lives of nearly 20 million people in the next three years. We also look forward to the fund providing validation to the wider investor community that this market segment is indeed creditworthy.”

In Africa, the market for solar portable lights
has grown by 90%

Demand for off-grid energy solutions is booming. In Africa the market for solar portable lights alone has grown by 90% annually for the last four years. Innovations in business models, coupled with declines in the cost of components like solar panels, are opening new opportunities for companies to offer affordable, high-quality products that can serve the needs of over two billion people worldwide who lack access to reliable and affordable energy.

Alzbeta Klein, IFC Global Director of Manufacturing, Agribusiness and Services, said: “Energy costs are a heavy burden for low-income people who do not have access to the electricity grid, both financially and in terms of the health impact. Innovative solar energy-based products can save money for consumers, create employment from manufacturing and distribution and contribute to reduced pollution and greenhouse gas emissions.”

Low income households currently spend around $50-150 annually on traditional fuels. These new affordable and modern energy products provide a range of socio-economic, health and environmental impacts to households, businesses and community services such as schools and clinics.

Affordable modern energy products such as M-KOPA's
solar home systems provide a range of socio-economic,
health and environmental impacts to households

Lack of working capital is a key barrier to faster growth for manufacturers, importers and distributors of such solutions. These companies have difficulty accessing debt financing as they usually lack the track-record and collateral required by local lenders. In 2013 SF and responsAbility partnered to co-create the new fund to address this financing gap by providing loans typically ranging from $500,000- $3million to commercially viable business models in the energy access value chain.

Investors and a Technical Assistance Facility

The fund has capital commitments of approximately $30 million and plans to raise additional capital in the medium-term in order to ensure that it is a reliable financing source for companies as they continue their growth path. Shell Foundation, a founding partner supported market assessment, fund design, fundraising and its launch. Shell Foundation is also a co-investor along with anchor investor IFC and other private investors including Skopos Impact Fund and The Adolf H Lundin Charitable Foundation.

The fund is complemented by a Technical Assistance Facility, which is supported by the Swiss State Secretariat for Economic Affairs SECO. The technical assistance aims to strengthen the operational capacity of client companies of the fund in order to ensure sustainable business growth and maximise development impact.

Commenting on the launch of the new investment fund, co-founder & CEO of responsAbility Klaus Tischhauser, said: “In addition to representing exciting investment opportunities, these businesses significantly contribute to development. We are pleased to partner with pioneering investors for our latest fund, which, for its offering, size and pan-regional reach, is the first of its kind.”

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