Sub-Saharan African Solar Companies To Gain From Shell & FMO’s Newly Launched USD 120 Mn Fund

In cahoots with the Dutch entrepreneurial development bank, FMO, UK-registered charity, Shell Foundation, has unveiled a USD 120 Mn fund to provide financing for early to growth-stage companies in SSA operating on the region’s solar space. 

Dubbed the Energy Entrepreneurs Growth Fund (EEGF), the initiative has been launched with an initial close of USD 45 Mn. Amsterdam-based impact-focused investment manager, Triple Jump, will serve as the portfolio manager. Then, Zurich-based venture and private equity firm with a solid footing in off-grid, Persistent, will act as the advisor to the fund. 

The fund which whose structuring was advised by Enclude – a Palladium company – is tailored to provide patient, flexible, and capital mixed with technical support, which currently forms a gap in the off-grid sector of Sub-Saharan Africa.

While more than 25 companies in the region will be financed, the facility will provide mezzanine structures and equity and debt funding via solutions designed to meet the changing needs of growing energy companies. 

Irfan Mirza, CEO and Co-founder of Trend Solar – a solar firm headquartered in Tanzania, admitted to WeeTracker that the fund appears to address the pressing capital (debt/equity) needs of renewable energy problems.

“It also provides high touch support and capacity building, all of the critical building blocks required for accelerating energy access ventures across Africa. 

We are actually already in discussions directly with the Shell Foundation, not specifically related to this fund but the general scope of the foundation and its work in supporting early-stage energy ventures like Trend Solar”. 

Shell Foundation director, Sam Parker, on the sidelines of the launch, theorized how the world could reach the UN Sustainable Development Goal 7.

He said that for the goal to be achieved, an addition or more than 300 companies will need funding to the tune of USD 10 Mn on average to become cash-flow positive and sufficiently scale to deliver energy services to millions of Sub-Saharan African users. 

“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.

The cleantech sector of Africa is attracting venture consideration more than ever. In September, the UK, France, Netherlands congruently invested USD 350 Mn to advance renewable energy in Africa.

According to the IEA, SSA has the lowest energy access rates in the world, as power reaches only roughly half of its people. About 600 million people lack electricity and 890 million cooks with traditional fuels.

Image Courtesy: Shell Foundation