Sub-Saharan Africa has the lowest access to energy in the world, with 600 million people lacking electricity and over 125 million households without access to modern energy services. This level of energy poverty has dire effects on economic growth and sustainable development, as access to energy is needed to improve living conditions and allow for development in rural Africa.

Shell Foundation and FMO, the Dutch entrepreneurial development bank, have launched the USD 120 million Energy Entrepreneurs Growth Fund (EEGF) to provide financing for innovative companies providing off-grid solar power in sub-Saharan Africa. The fund will be managed by Triple Jump and Persistent Energy Capital.

“This initiative will achieve meaningful impact, changing the lives for millions of people,” says Leonie Arnoldi, Director at Enclude, Palladium’s capital advisory business. “It will also achieve financial return, opening up access to what is a massive market opportunity for investors.”

Enclude advised on the structuring and execution of the fund.

Bridging the Funding Gap

The fund is designed to provide patient, flexible capital combined with the technical assistance that’s currently lacking in the off-grid energy ecosystem. It will finance more than 25 companies and provide mezzanine structures (a hybrid of debt and equity financing) as well as customised equity and debt investments.

For Shell Foundation Director Sam Parker, this is about achieving the UN’s Sustainable Development Goals (SDGs). “To reach SDG 7 and deliver universal energy access, an additional 300+ companies will require funding of USD 10 million on average to become cashflow positive and grow to sufficient scale to deliver energy services to millions of consumers in sub-Saharan Africa,” he says. “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.”

With a fund life of 12 years, EEGF provides a longer-than-usual investment holding and support period, which is better suited to businesses in emerging economies. EEGF’s investee companies will also be able to access support and advice to help scale and move to the next stages of development.

Enclude, Palladium's Capital Advisory business, connects clients with the capital they need to finance their growth. The investor base it can tap includes public, private and philanthropic sources; the transactions it arranges create opportunities that generate both financial returns and social value. Visit www.EncludeCapital.com for more information.