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CBE I delivers 15% IRR to investors

Anna Lyudvig
Nov. 17, 2020, 5:04 p.m.

Word count: 565

CrossBoundary Energy (CBE ), a direct investment arm of CrossBoundary that finances solar projects in Africa, has exited of its first fund at a 15% net IRR to investors.

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CrossBoundary Energy (CBE ), a direct investment arm of CrossBoundary that finances solar projects in Africa, has exited of its first fund at a 15% net IRR to investors.

In addition, ARCH Emerging Markets Partners’ Africa Renewable Power Fund (ARCH ARPF) has provided $40m in new equity funding to exit initial investors and support CrossBoundary Energy to continue to develop, construct and operate distributed commercial & industrial (C&I) solar projects that will provide businesses across Africa with access to cheaper, cleaner power.

Over the last five years, CBE has pioneered the creation of a C&I solar sector in Africa.

CBE is now operating or delivering  $57m in assets, serving 20 customers across eight countries in Africa, including more than 40MW of fully financed solar PV and 10 MWh of battery storage projects.
CBE1 was closed in November 2015 as Africa’s first dedicated fund for C&I solar.

It was also a prototype for a new blended finance approach to renewables in Africa.

USAID’s Power Africa initiative contributed $1.3m in the form of a repayable grant to catalyse private investors into the fund.

USAID’s subordinated equity contribution attracted additional equity investors, effectively resulting in leverage of matching private capital of more than 6.0x. At the close of this transaction, this leverage increased to more than 30x and USAID’s blended finance contribution of $1.3m has now been repaid to the US Treasury with a return of 5%.

CBE1 also benefited from grant support from OPIC (now the US International Development Finance Corporation) and the Shell Foundation, in partnership with the UK’s Foreign, Commonwealth & Development Office, which allowed the fund to scale its operations.
Pieter Joubert, CIO, CrossBoundary Energy, said: “We are incredibly grateful for the early stage backing we received from our partners and investors such as Blue Haven Initiative, Ceniarth, Slocum Investments, Treehouse Investments and others, who trusted in our vision to bring cheap, clean energy to businesses across the continent and continued to support and work with us to realise that vision. In terms of what comes next, partnering with an industry-leading investor like ARCH ARPF highlights the proven viability of captive commercial and industrial solar projects in Africa.”

“We’re very excited to work with ARCH ARPF to continue providing Africa’s leading businesses with cheaper, cleaner, more reliable power at no upfront cost. This commitment by ARCH ARPF represents the next phase of a larger $100m transaction which will allow us to take the C&I sector to scale across Africa, and in doing so, further reduce energy costs for our customers, create additional jobs within the solar sector, and significantly reduce carbon emissions.”
The substantial raise of new capital highlights the exciting potential of distributed solar to provide more reliable and affordable power to African businesses.
William Barry, Managing Director, ARCH ARPF, said, “We believe that distributed renewables will be an important part of the energy future in Africa. The lower cost for solar and storage means that companies like CrossBoundary Energy can offer retail consumers reliable, cost-effective solutions to their electricity needs.”

“At ARCH ARPF, we aim to partner with strong management teams and invest in scalable business models that offer compelling alternatives to their customers, including in the C&I space. CBE has been able to grow a portfolio of high-quality assets and their growth continues to rapidly accelerate. We are excited to support them to scale.”

 

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