AfricaGoGreen Fund raises $47M new equity Investments to Advance Climate Resilience in Africa
The AfricaGoGreen Fund (AGGF) made news today with the announcement of its successful second fundraising close, securing $47 million in combined investments from prestigious financial institutions, including the International Finance Corporation (IFC), the African Development Bank (AfDB), the Nordic Development Fund (NDF), and the Sustainable Energy Fund for Africa (SEFA).
With the money, AGGF will be able to finance more climate-friendly projects in Africa, such as the purchase of high-efficiency household goods and industrial machinery, the renovation and construction of new green buildings and existing buildings, and the installation of rooftop solar and battery storage for domestic, commercial, and industrial consumers.
IFC contributed equity worth $17 million, including money from the IDA20 Private Sector Window Blended Finance Facility. IFC contributed $30 million in loans to the fund in addition to the equity, giving AGGF the long-term financing it needed to finish the second close fundraise.
Each organization contributed $10 million in equity, including the Nordic Development Fund, the Sustainable Energy Fund for Africa, and the African Development Bank (www.AfDB.org/en). In December 2022, Calvert Impact Capital closed on a further $10 million in debt.
The AGGF is the first structured debt fund in Africa devoted to energy efficiency solutions, and it was established by KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) in early 2021. AGGF is managed by LHGP Asset Management. At final closing, the fund hopes to have raised between $230 million and $250 million. Total funding has reached $138 million with the current fundraising round, showing that the fund is gaining momentum to grow to its full scope.
AGGF is accompanied by a technical assistance facility of $3.3 million from KFW on behalf of BMZ, which supports project development and market studies, and provides transaction counseling and capacity building to stakeholders. Fully operational since 2021, AGGF has funded BBOXX (https://apo-opa.info/3YQIwIs), a pay-as-you-go solar-powered solutions provider, to expedite access to clean cooking solutions for millions of Africans, as well as AktivCo (https://apo-opa.info/415h4IQ), a telecom energy services company, to develop clean energy solutions for powering telecommunication towers in Burkina Fas
The Solarise transaction, which invests in energy-efficient appliances in Kenya, South Africa, and Mauritius, was also recently closed by AGGF, while the deals for AktivCo and BBOXX were both increased in size.
The AfricaGoGreen Fund, which was started with seed money from the German Government, is pleased to welcome the new investors. We anticipate seeing additional like-minded investors join them. According to Johannes Scholl, Head of Division at KfW, this successful second fundraising shows that the fund is on pace to play a significant role in the just energy transition in Africa.
According to Henrik Elschner Pedersen, IFC Regional Industry Director in Africa for Manufacturing, Agribusiness, and Services, AfricaGoGreen’s innovative energy efficiency focus makes vital capital available to companies that are assisting the region’s energy transformation while also extending access to electricity, green building, and e-mobility solutions.
The Sustainable Energy Fund for Africa and the AfDB successfully brought together other investors who shared the same goals of creating a more climate-resilient Africa and assisting in the decarbonization of African nations. Dr. Daniel Schroth, Director of Renewable Energy And Energy Efficiency Department, said, “We look forward to seeing more like-minded development institutions and commercial investors join us in combating the harmful effects of climate change on the continent.”
In order to achieve the SDGs and strengthen climate resilience, Henrik Franklin, Director for Portfolio Origination and Management at the Nordic Development Fund, stated that increasing access to clean and affordable energy in Africa is essential. The AGGF is a ground-breaking program that promotes energy efficiency not only via financing but also by enhancing the enabling environment by drafting legislation and building capability.
Franklin stated that NDF is happy to work with AfDB, KfW, IFC, SEFA, Lion’s Head, and other partners to deliver climate action as an early-stage and catalytic investment in AGGF.
We are pioneering in assisting the African climate transition through AGGF. All of us must do everything in our power to cut CO2 emissions due to the severity of the global warming crisis. The AGGF was created specifically to carry out this function. The fact that there is such a large group of investors demonstrates that the AGGF’s goals are broadly shared. According to Clemens Calice, CEO of LHGP, we are honored to have the chance to take on the duties and challenges that lie ahead of us.
