DFC, the U.S. International Development Finance Corporation, has committed to contribute $40 million in a mix of junior and senior notes to the Energy Entrepreneurs Growth Fund (EEGF).
“DFC’s investment in the EEGF will aid companies that give people in Sub-Saharan Africa who are now without access to essential services access to energy. The EEGF will benefit local communities and promote economic growth and development by providing more funding for this transformative activity, according to Scott Nathan, CEO of DFC.
The EEGF provides early-stage firms with catalytic finance and technical support in order to expand off-grid households and businesses’ access to reliable, clean, safe, and affordable energy.
The Dutch Entrepreneurial Development Bank, FMO, and the UK charity Shell Foundation jointly sponsored the creation of the EEGF in 2019.
The use of blended finance allows EEGF to unlock additional capital and further its positive impact in improving access to energy and advancing women’s economic empowerment.
DFC’s announcement complements last month’s commitment by the Nordic Development Fund and brings commitments to EEGF to $106m.
Today, 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.
“Collaboration between international growth capital providers is key to scaling clean energy businesses and to reaching underserved customers,” said Jonathan Berman, CEO of Shell Foundation.
“Shell Foundation seeks to de-risk innovative, impactful ideas so others can invest. This deal further demonstrates that we and our colleagues can widen pools of investment opportunities for commercially-minded investors, and positively impact the lives of millions of people. We are delighted to have worked with our partners at DFC to bring this deal to fruition.”
EEGF is managed by Triple Jump, an Amsterdam based 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 $31.5m.
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 to their stakeholders.
EEGF’s primary objective is to increase the 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.
