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FEI attracts nearly $160m from AfDB, KfW, Norfund and others

Anna Lyudvig
March 19, 2020, 2:24 p.m.
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The African Development Bank, the European Commission, KfW, the Clean Technology Fund, Norfund, and other investors have committed nearly $160m to the first close of the Facility for Energy Inclusion (FEI).

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The African Development Bank, the European Commission, KfW, the Clean Technology Fund, Norfund, and other investors have committed nearly $160m to the first close of the Facility for Energy Inclusion (FEI).

The Facility’s first close was reached on December 3, 2019.

Babette Stein von Kamienski, Head of Division Infrastructure, Southern Africa at KfW, said: “With our investment in this flagship fund, KfW on behalf of the German Government emphasizes its commitment to work with other development finance institutions to improve access to clean energy in Africa. Our junior equity investment aims at mobilizing public equity and private debt investors to scale up the financial means available for innovative renewable energy projects like new mini-grids to electrify Africa.”

FEI is a targeted $400m fund to improve energy access across Africa through small-scale renewable energy and mini-grid projects.

Spearheaded by the African Development Bank, FEI serves as a financing platform to catalyze financial support for innovative energy access solutions.

The Bank, as the Facility’s anchor sponsor, has put up $90m in financing.

That sum includes $20m that the Bank is providing in its capacity as the implementing agency of the Clean Technology Fund.

“After three years of hard work, we are pleased to see the second and larger piece of our energy access debt funding platform — FEI — up and running on the back of very significant commitments from our partners. We look forward to seeing FEI catalyze financing for new energy sector business models and accelerate our efforts to electrify Africa,” said Wale Shonibare, African Development Bank Acting Vice-President of Power, Energy, Climate & Green Growth.

In addition to the Bank’s commitment, the European Commission committed €25m to the Fund, Norfund committed $23m, and German Development Bank KfW committed €25m.

FEI will also include a $10m Project Preparation Facility (PPF) from the Global Environment Facility that will provide reimbursable grants for transaction advisory to facilitate financial close.

Mark Davis, Executive Vice President, Clean Energy at Norfund, said: “Norfund is pleased to participate in this new facility which makes debt financing available to smaller scale renewable power projects in Africa. We anticipate that the facility will be successful in attracting private capital to this segment of the market.”

The Facility supports small-scale Independent Power Producers (IPPs) delivering power to the grid, mini-grids and captive power projects.

Projects in sub-Saharan African countries where electricity access rates are comparatively lower receive priority.

Other eligibility criteria include the requirement to use renewable energy technology, to have capital expenditure of less than $30m and generation capacity below 25MW.

Initial pipeline projects have been identified in Burundi, Cape Verde, Madagascar, Malawi and Mozambique.

FEI is managed by LHGP Asset Management, part of Lion’s Head Group, a fund manager focused on bringing innovative financial solutions to emerging markets and selected through an international competitive process.

“As Fund Manager, we are excited that the limited partners have given us a flexible mandate to provide tailored financing solutions to this exciting industry which has the potential to make green growth a reality in Africa. By focusing on smaller renewable energy producers, FEI will contribute to the electrification of Africa, in particular in more remote and traditionally neglected parts of the continent,” said Clemens Calice, Co-CEO of LHGP Asset Management, the Fund Manager of FEI.

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