Investec and UK government team up to support South African green investor

International bank Investec and a UK-based investor jointly run by the UK government and an Australian bank, have teamed up to commit ZAR 1 billion to green infrastructure in sub-Saharan Africa.

A new renewable energy investment vehicle has received a ZAR 1 billion commitment from Anglo South African Investec and a United Kingdom government investment vehicle, with the aim of providing financial support to, and generating returns from, the green energy sector in Africa.

Revego Africa Energy has been set up as a specialised renewable energy investment vehicle to operate in South Africa and across sub-Saharan Africa by Revego Fund Managers, a majority black owned and managed fund manager, in which Investec owns shares.

A statement on the launch of the investment vehicle said it would aim to provide “long-term stable returns through a progressive increase in dividend distributions, derived from a diversified portfolio of operational renewable energy assets”.

Investec has been joined in making the ZAR 1 billion commitment by UK Climate Investments (UKCI), a joint venture between the UK government’s Department for Business, energy and Industrial Strategy (BEIS) and the Green Investment Group (GIG), now privately owned by Australian bank Macquarie Group, but originally set up by the UK government as a green infrastructure investment company.

Chief information officer of Revego, Mike Meeser, said in a statement: “We see a significant renewable energy market in South Africa and the broader sub-Saharan Africa, where approximately 600 million people do not have access to reliable electricity supply and will be targeting equity investments in operational projects, to enable initial developers and investors to invest further in electrification, while also providing investors in Revego with a stable long-term yield.”

UKCI was founded with a GBP 200 million commitment from another UK government entity, the International Climate Fund, with the intention of funding green infrastructure, starting with sub-Saharan Africa and India.

Managing director of UKCI, Richard Abel, said: “More than half of the world’s population currently living without access to electricity are in sub-Saharan Africa. By helping to facilitate the recycling of development capital into new renewable energy projects, this green finance initiative represents an exciting opportunity to accelerate the deployment of clean generation capacity for the region.”

The investment came ahead of a planned listing of Revego on the Johannesburg Stock Exchange in the first half of 2019, targeting an initial public offering of ZAR 2 billion.

Speaking on behalf of Investec, the head of the corporate and institutional banking division Lourens van Rensburg, commented that the bank is committed to investing in South Africa, where it is jointly headquartered alongside London, and to investing in the electrification of Africa through renewable energy, adding: “This listing will provide the investment community with access to equity investments in the renewable energy sector, which has to date been difficult to access.”

Investor interest in Africa’s renewable energy sector has been growing in recent years, as the continent faces the challenges of industrialisation and power shortages. Last year, Italian oil and gas company Eni partnered with the United Nations Development Programme to improve access to sustainable energy on the continent, while the World Bank’s International Finance Corporation teamed up with Moroccan company Gaia Energy to create a wind energy platform.

Elsewhere, international investors are supporting wind energy projects in Senegal and in South Africa.

There has also been growing interest in other alternative energy solutions, such as off-grid power, which has received investment from EDF, among others.