The Shell Foundation together with the Dutch entrepreneurial development bank, FMO, have announced the launch of the $120 million Energy Entrepreneurs Growth Fund (EEGF), with an initial close of $45 million, providing catalytic financing for early to growth stage companies in sub-Saharan Africa operating in the access to energy ecosystem.
Triple Jump, an Amsterdam based impact-focused investment manager, will act as portfolio manager and Persistent, a Zurich based venture and private equity firm with expertise in the off-grid sector, will serve as investment advisor to the fund. Enclude, a Palladium company, advised on the structuring and execution of the fund.
The fund is designed to provide patient, flexible capital combined with technical assistance that is currently lacking in the off-grid energy ecosystem.
It will finance more than 25 companies and predominantly provides mezzanine structures as well as equity and debt investments through tailored solutions to 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 to their stakeholders.
“To reach the UN Sustainable Development Goal 7 and deliver universal energy access, an additional 300+ companies will require funding of $10 million on average to become cash flow positive and grow to sufficient scale to deliver energy services to millions of consumers in sub-Saharan Africa,” said Sam Parker, director at the Shell Foundation.
“The EEGF will help to bridge the funding gap which today prevents early stage, growing energy companies from accessing the range of risk capital and business support they need to develop to the next stage and ultimately attract commercial capital,” Parker added.
Scaling innovative companies
Frederik van Pallandt, director Energy at FMO also commented: “Supporting renewable energy programmes is key to FMO’s strategy, as lack of access to energy is one of the biggest barriers to development. We are excited to announce the EEGF partnership to help boost and scale innovative companies providing off-grid solar power in Africa.
“Right now, there is a clear funding gap between early stage off-grid companies which are primarily served by grant providers, and larger players that are able to tap into commercial sources of capital. EEGF strives to close this gap. In addition, through the unique partnership between Triple Jump and Persistent, EEGF’s investee companies will be able to benefit from hands-on operational support and advice in order to help them transition into the next stages of development.”
FMO’s contribution to the EEGF is partly funded by Building Prospects ($7.5 million) and the Access to Energy Fund ($7.5 million), which FMO manages on behalf of the Dutch government.
“The access to clean energy space is still a rather small but fast-growing industry, and one that is certainly relevant to Triple Jump’s mission to empower people and improve lives in emerging markets,” said Jan-Henrik Kuhlmann, head of sustainable energy for Triple Jump.
According to Kuhlmann, providing risk capital and active support from expert pools in various critical dimensions of the access to energy business models will be a key deliverable to foster operational efficiency, professionalisation, and sustainable growth of the investees and the entire access to energy eco-system, “while creating a positive sustainable development impact”.
Persistent is the advisor to the fund, it’s co-founder Dirk Muench said: “We are excited to bring our sector expertise to the EEGF and help early growth stage ventures raise the capital they need to clear the financing gap.”