South Africa’s first private equity clean technology fund, Evolution One, has reached its final close at ZAR700m ($94m) in capital from local and foreign investors, including supranational and sovereign wealth funds.
It said this capital will be dedicated to equity investments in a suite of clean technology projects and enterprises including new energy and environment-focused technologies located in South Africa and across Southern African Development Community (SADC) countries.
UK-based advisor to a family trust, Consensus Business Group, which led the establishment of the fund as founding cornerstone investor, has secured the involvement and participation of seven other international organisations.
Vincent Tchenguiz, chairman of Consensus, said, ‘We have extensive experience and a long track record in global clean technology investing and this has given our partners the confidence to join with us in setting up Evolution One in South Africa.’
Consensus is joined in the Evolution One partnership by IFC, a member of the World Bank Group; the Finnish Fund for Industrial Cooperation; the Swiss Investment Fund for Emerging Markets; Global
Energy Efficiency and Renewable Energy Fund, a compartment of the European Investment Fund; the African Development Bank; the Norwegian Investment Fund for Developing Countries; and the Industrial Development Corporation of South Africa.
Evolution One said its investment strategy centres on long-term equity and equity-related investment based on active management and post-investment value addition.
Expansion capital investments in the country are prioritised although the fund will consider earlier stage environmental infrastructure projects with clear evidence of early revenue streams and profitability, said the fund.
The fund will also invest in proven technologies or projects that are able to clearly demonstrate market adoption, it added.
The minimum investment size of the fund is ZAR10m ($1.4m) and its maximum investment is ZAR100m ($14m) in any one project or technology.
Tchenguiz added, ‘Evolution One Fund is the first dedicated clean technology private equity fund to be established for Africa and its value proposition is to bring Consensus’s active financial modelling and specialist insights together with expertise to projects and technology enterprises in South Africa and the SADC region.
‘In addition, the investment capital of this network of leading investment institutions inherently leverages access to specialised knowledge and skills in the broader global clean technology sector.’
The fund is advised by a fund management team comprising nine principals and analysts that have the ability to structure broad black economic empowerment transactions, said Tchenguiz.
Evolution One Fund is a ten-year fund committed to making investments into clean technologies in the new energy and environmental sectors, which include cleaner energy generation such as wind and solar energy, and energy efficiency, cleaner production and more efficient manufacturing processes.
In addition, air quality and emissions control, water quality and resource management, waste management, agribusiness, natural products and materials as well as related services for sustainable buildings may also be included.
Michael Brooks, CEO of local South African fund advisor, Inspired Evolution Investment Management (IEIM), which aims to support and guide target invested companies and provide long-term capital growth, said an announcement would be made within the next few weeks providing details of the first three investments to be undertaken by the fund.
‘In the past two years we have seen significant positive shifts in the commercial thinking underpinning the roll out of clean technology projects and enterprises, both within the public and private sectors,’ said Brooks. ‘The South African government’s recent adoption and implementation of the renewable energy feed-in tariffs and co-generation feed-in tariffs are evidence of the state’s support for regulatory drivers to underpin the development at scale of commercially viable renewable energy projects here and in our neighbouring countries.’
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