NextEnergy Capital has commenced raising a $550 million (€400million) Africa-focused renewable energy fund, ix:Africa.
The private equity and impact investment vehicle is primarily targeting US and Europe-based LPs through a subsidiary South African Rand-denominated fund. Approximately 80% of the fund will be committed to power generation and infrastructure projects, while the remainder will mainly go to pre-permit power plant development and early-stage clean technology. An undisclosed portion of the fund will be allocated to social impact projects in the food, housing and health sectors.
The fund will be managed by 12 people, five of which will be based in South Africa and will work alongside over 40 local professionals. NextEnergy believes that impact investment will become one of the most powerful changes within the asset management industry in years to come. JP Morgan predicts $1 trillion worth of investments in the asset class globally over the next 10 years.
“Growth in emerging countries must include a social and economic perspective,” said Dr Mamphela Ramphele, a member of the fund’s board.“Renewable energy projects provide one of the quickest and most sustainable ways of achieving this, providing power capacity that can boost economic growth in a relatively short space of time,”
NextEnergy has already started investing in South Africa and has acquired a 57% stake in an energy project near Johannesburg. Total investment in the project current stands at approximately $25m power deal (R200m) and includes financing from local investors, including the South Africa-based Industrial Development Corporation.
A community trust, financed by the South African Development Bank through a dedicated line of credit, will hold a 21% stake in the plant and will ensure that the dividends finance education, training and health projects. NextEnergy expects the 6.5MW plant to power 74,000 households over a twenty-year lifespan. Since 2006, NextEnergy Capital has invested €140m in power assets and manages over €2billion worth of clean power assets, globally.