The U.S. International Development Finance Corporation (DFC) has committed $40 million in Energy Entrepreneurs Growth Fund (EEGF), in a mix of junior and senior notes to boost the development of renewable energy in Africa.
Created in 2019, the EEGF offers catalytic financing and technical assistance to early and growth-stage companies that increase access to clean, safe, dependable, and affordable energy for off-grid households and businesses in Sub-Saharan Africa.
According to DFC, about 600 million people in Sub-Saharan Africa lack access to electricity, which corresponds to three-quarters of the global population without access to energy. Despite progress made over the last decades in reducing the number of people without access to electricity, the COVID-19 pandemic has reversed the trend, pushing many countries away from the goal of achieving universal access by 2030.
“DFC’s investment in EEGF will support businesses that provide energy access to those who currently lack basic services across Sub-Saharan Africa. By providing additional capital for this transformational work, EEGF will help communities in the region and spur economic growth and development,” said Scott Nathan, Chief Executive Officer at DFC.
EEGF is managed by Triple Jump, an Amsterdam-based leading impact-focused investment manager, with Persistent, a Nairobi-based venture builder focused on innovative climate businesses in Africa with extensive expertise in the off-grid energy sector, acting as investment advisor to the fund. The fund focuses on access to energy in the broad sense, including rent-to-own and energy-as-a-service operators. It also supports enablers in the sector, such as software providers, retailers and other distribution businesses.
The fund is designed to provide patient, flexible capital, with a focus on mezzanine instruments, combined with technical assistance that is currently lacking in the off-grid energy ecosystem. EEGF has already been investing and expects to have ten companies in its portfolio by the end of 2022, representing a total investment commitment of $31.5 million. In addition to mezzanine capital, the fund provides equity and debt instruments to achieve tailored solutions that meet the changing needs of growing energy companies. With a fund life of 12 years, EEGF provides a longer investment holding and support period, recognizing the inherent need for such businesses in emerging economies to unlock value creation for their stakeholders.
EEGF’s primary objective is to increase access to energy for off-grid households and businesses. This includes not just the number of people with such access, but also the depth of access that is provided. Further targets include emissions reductions, gender equity targets, job creation and additional investment catalyzed.
