In accordance to its pledge at the UN Climate Change Conference in Cancun, the Overseas Private Investment Corporation (OPIC) has announced nearly $500 million in financing for five new renewable energy investment funds. This could ultimately lead to $1.5 billion in investments in the renewable energy sector in Southeast Asia and Africa.
This initiative will help manage the fast-growing economy of Southeast Asia and enhance the farming sector in Africa as well as supporting Feed the Future, the Obama Administration’s global hunger and food security initiative. These new funds fulfill OPIC President Elizabeth Littlefield’s pledge to scale-up climate finance in developing countries and “will provide much-needed capital to the frontier economies of South and Southeast Asia…and to the farming sectors of sub-Saharan Africa, which can benefit greatly from increased investment.”
The five investment funds are as follows:
- Aloe Environment Fund III: Aloe Private Equity will act as fund manager and provide capital to companies with proven technologies and products to tackle the environmental challenges. It will target small to medium enterprises and receive a total of $136 million from OPIC to finance the $420 million fund. The fund will invest in renewable energy, recycling and energy efficiency in India and Southeast Asia.
- Renewable Energy Asia Fund: Berkley Energy will receive $62 million to finance the $187 million fund which will help develop renewable energy projects primarily in the Philippines and India. The fund will focus on mature renewable technologies such as wind and hydro.
- Mekong Renewable Resources: OPIC has granted Indochina Capital Corporation a $50 million contribution for the $150 million fund. The fund will invest in renewable energy across lower Mekong counties of Vietnam, Laos and Cambodia. The fund will specifically target environmental services and infrastructure; renewable energy; and energy efficiency sectors specifically investing in carbon reduction or emission neutral projects.
- African Agriculture Fund: Phatisa is on track to receive $100 million from OPIC out of the necessary $300 million for the fund. The project will focus on food production in Africa, specifically in farms/plantations and processing and animal feeds sector. The fund will invest in commercial farming operations and modern management skills.
- The Silverlands Fund: OPIC will provide $150 million to SilverStreet Capital LLP to achieve the target capitalization of $450 million. The fund will provide investments in Sub-Saharan countries: Malawi, Mozambique, South Africa, Tanzania, Uganda, and Zambia. The focus will mainly be on farmland with investments most likely in grains, soya, fruits, vegetables, sugar, tea, and coffee. The fund hopes to reach 100,000 small farmers and increase total food production to 2.8 million tons a year over the course of 10 years.
These five funds were chosen out of the 56 respondents of OPIC’s Global Renewable Resources Funds call. Not only will these funds help promote renewable energy and food security, it will also provide a boost to the economies of these regions.
