The blended finance fund, which invests in green energy and infrastructure in developing countries, is focused on climate mitigation and adaptation, social development, economic infrastructure and gender equality investment.
The Mirova Gigaton Fund, a blended finance vehicle targeting energy transition investments in the developing world, has received $282m (€261m) of commitments, bolstered by $75m from the European Investment Bank (EIB).
The fund, which reached a first close of $171m in March 2023, has a target size of $500m. It aims to attract institutional investor support for climate mitigation and adaptation, social development, economic infrastructure and gender equality investment across developing countries. It is managed by Paris-based Mirova, which is part of the Natixis Group, while Mirova SunFunder East Africa is acting as investment advisor.
Ryan Levinson, the fund’s director and Mirova’s head of emerging market energy transition, said the EIB’s involvement in the fund was “a positive signal to private and public investors looking to allocate capital in emerging markets”.
The main tranche of EIB funding is a $75m senior commitment. A further €5m of junior investment is being provided under the Luxembourg-EIB Climate Finance Platform, which aims to catalyse private and public sector investments for companies in emerging markets working on climate change mitigation and adaptation projects.
“The challenges of sustainable finance go beyond the borders of developed countries. By exceeding half its target after only one year of fundraising, the Mirova Gigaton Fund is testament to our ambition to develop our emerging markets platform to provide capital where investment needs – particularly in infrastructure – will be the greatest in the coming decades,” Raphaël Lance, Mirova’s head of energy transition funds, said.
The fund is targeting SMEs working in sectors such as solar home systems, agri-solar, commercial and industrial solar, telecom tower solarisation, and mini-grids. It also looking at at investments in e-mobility, battery storage, climate-smart food systems, energy efficiency and carbon credit pre-financing.
Mirova also said the fund had made its first investments, two based in Kenya and another currently focused on West Africa.
Nairobi-based SunCulture designs, manufactures, finances and services solar energy systems and irrigation equipment for smallholder farmers, working with a “pay as you grow” business model to make it more affordable for customers.
The Gigaton fund’s investment is part of a $12m syndicated facility with Mirova SunFunder, Nithio and Triodos Investment Management. This will enable SunCulture to finance inventory and receivables for its Kenyan subsidiary across its renewable energy products and irrigation equipment and is expected to allow SunCulture to reach more smallholder farmers, whose livelihoods depend on access to affordable and reliable access to energy and water.
Solar Panda, also Nairobi-based, provides home solar systems to rural Africans with no electricity access. By providing affordable clean energy equipment to more than 300,000 homes it has helped to reduce the use of health- and environment-damaging kerosene. The company estimates a household can save $300-$800 over four years through reduced kerosene and mobile phone charging costs. Upgradeable equipment and a “loan-to-own” model also helps customers to manage costs.
A $19.5m debt facility for Solar Panda, arranged by Mirova SunFunder, includes a $4m commitment from the Mirova Gigaton Fund managed by Mirova and $4m from the Solar Energy Transformation Fund, managed by Mirova SunFunder.
The third investment is in Energy Vision, an energy service company providing solar energy to power telecoms masts and other sites in Africa, cutting costs and reducing the carbon footprint of infrastructure developers. It has converted over 300 telecom sites in Gabon and 50 off-grid sites in Nigeria to solar power. By facilitating the expansion of mobile networks to remote and off-grid areas, the company is contributing to development of low-income populations. Mirova also launched another large blended finance fund in December. The Mirova Sustainable Land Fund 2 aims to raise €350m from public bodies and institutional investors to invest in companies focused on sustainable land management.