The Brief: Big (and small) investment opportunities in renewable energy on this month’s Liist

Greetings Agents of Impact!

In today’s Brief:

• The Liist: Big and small opportunities in renewable energy investment
• Blue Earth’s semi-liquid private credit fund
• Debt to scale clean energy in Africa
• Edtech for children

Featured: The Liist

In renewable energy investing, small is beautiful – and so is large-scale infrastructure. Impact managers on this month’s Liist of funds that are actively raising capital highlight the diversity of opportunities for capital to plug into the global clean energy transition. An estimated $4 trillion in financing is needed each year to support that transition; investments in clean energy infrastructure and technology this year are expected to reach $2 trillion for the first time. Women-led MAC Global Partners is building on its experience in renewables asset ownership with a planned $600 million fund to make growth equity investments in clean energy companies in Europe and North America. At the opposite end of the investment spectrum is Fortis Green Renewables, which is in the market with its first fund to finance small-scale green energy developers in East Africa. Excluding China, just 15% or so of clean energy investments are directed to emerging markets. Access to capital, says Fortis, is especially challenging for developers of small projects, which many commercial investors deem too risky or costly to underwrite. 

• Climate + gender. Catalyst Fund is writing very early equity checks to locally-led companies in Africa supporting livelihood resilience and adaptation to climate change. Singapore-based Circulate Capital is adapting its plastic waste investment strategy from Southeast Asia to Latin America (see, “Circulate Capital brings growth capital to plastics recycling in Latin America”). Both are investing with a gender-lens (see ImpactAlpha’s database of more than three dozen Climate + Gender funds). Catalyst is women-led and looking for 40% of its portfolio to be companies run by women. Circulate has a portfolio target of 30% women-led companies, with other gender targets for companies’ boards, leadership, staff and suppliers.
  
• Neglected markets. Netherlands-based XSML is in the market with its fourth African Rivers Fund to prove that there are solid and profitable opportunities in Africa’s less-invested markets, like the Democratic Republic of the Congo, Uganda and Angola (for background see, “XSML raises nearly $100 million to invest in African small and mid-sized businesses”). The firm focuses on financing for small businesses and is moving into emerging green opportunities, particularly waste management and the circular economy.
  
• Keep reading, “In renewable energy investing, small is beautiful – and so is large-scale infrastructure,” by Jessica Pothering on ImpactAlpha. Check out ImpactAlpha’s database of more than 150 impact funds that have been featured on The Liist. Know an impact fund manager currently raising capital? Complete this short form.

Dealflow: Private Credit

Blue Earth offers liquidity with a private-credit impact fund. Blue Earth Capital, the impact investing firm established by founders of the private equity giant Partners Group, has reached a first close of $113 million for a new private credit fund. The evergreen, “semi-liquid” fund is designed to win over mission-driven investors that hesitate to invest in private markets due to the lack of liquidity. The fund offers investors “exposure to both developed and emerging markets through a single, diversified vehicle,” said Blue Earth’s Amy Wang. Anchor investors include family offices and a large pension fund, the firm said. Wang, who heads private credit at Blue Earth, also manages the firm’s closed-ended private credit strategy, which notched a $108 million close for its second fund last year. 

• Crowding in. To crowd new investors into impact investing, Blue Earth has made it a priority in recent years to offer liquidity, early-redemption and diversification opportunities. Last year, it launched impact secondaries funds for developed markets and for emerging markets, which can generate positive returns more quickly than primary private equity funds. In 2022, Blue Earth closed an emerging markets-focused fund-of-funds for both private debt and private equity funds, providing additional diversification for investors.
  
• Jump in. 

CrossBoundary Energy lands $140 million to scale commercial renewable energy in Africa. Commercial and industrial companies in Africa are building on-site solar to trim costs and lock in fixed, long-term costs while avoiding the volatile pricing and power outages of national grids. Most such solar projects have been financed with cash, according to a BNEF study; developers cite a lack of debt financing as the biggest obstacle to project completion. CrossBoundary Energy develops and finances solar mini-grids with battery storage for African businesses in mining, agriculture, manufacturing, real estate and other sectors. South Africa’s Standard Bank is providing the CrossBoundary group with $140 million in senior debt to expand its commercial and industrial portfolio. 

• Commercial capital. The $140 million loan represents the first tranche of $300 million of senior debt earmarked by Standard Bank for CrossBoundary, and follows a $20 million investment from the bank last year. The partnership with Standard Bank will help CrossBoundary Energy “expand and accelerate energy-as-a-service to African customers,” CrossBoundary’s Pieter Joubert said. In addition to serving industrial customers, CrossBoundary in 2020 launched CrossBoundary Access, a blended finance facility for mini-grids in rural Africa, which raised $10 million last year from the African Development Bank’s Sustainable Energy Fund for Africa.
  
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Dealflow overflow. Investment news crossing our desks:

• Rwanda’s BioMassters, which makes cookstoves and pellet fuel out of biomass waste, raised funding from Acumen to set up a production plant and distribute cookstoves to 25,000 households and small businesses. (TechMoran)

• Reefilla, an Italian startup that offers a mobile charging system for electric vehicles, raised €4.5 million ($4.7 million) in a round led by CDP Venture Capital’s Green Transition Fund to expand its markets and research second life batteries. (EU-Startups)

• Ninety One’s Emerging Africa and Asia Infrastructure Fund joined the International Finance Corp. and Proparco as co-anchors in a $1.2 billion bond issuance for digital connectivity in Africa. (EAAIF)

Impact Voices: Education Tech

How impact financing can deliver better edtech products to children. In the $340 billion market for education technology, the gap between best practices and what educational apps actually deliver to children is substantial, Natalia Kucirkova of Norway’s International Centre for EdTech Impact argues in a guest post on ImpactAlpha. A UNESCO report last year called for a ban on smartphones in educational settings due to concerns over their limited contribution to meaningful learning outcomes (California’s new Phone-Free School Act goes into effect in 2026). Too often, says Kucirkova, real-world implementation and measurement challenges hinder edtech’s ability to deliver inclusive and evidence-based solutions. Edtech that is designed for impact rather than simply scale “can deliver positive outcomes,” she says.

• Locally driven. Edtech initiatives in and for the Global South represent a bright spot. Organizations like the Gates Foundation are investing in apps focused on foundational literacy and numeracy skills. Edtech accelerator initiatives in Africa, backed by Mastercard Foundation, are supporting locally-driven edtech solutions to improve educational outcomes. Such innovations are being “driven by the evidence that technology can help address the global learning crisis,” says Kucirkova.
  
• Alignment and accountability. Impact investors can help further overcome implementation challenges by aligning incentives and promoting accountability. For example, outcomes-based contracting in several US  school districts is fostering accountability among districts and edtech providers. Says Kucirkova, “By shifting the focus from cost savings or teacher efficiency to tangible student results, this mechanism significantly enhances the emphasis on impact within educational solutions.”

• Keep reading, “How impact financing can deliver better edtech products to children,” by Natalia Kucirkova of the International Centre for EdTech Impact on ImpactAlpha. 

Agents of Impact: This Week’s Events

Today: ImpactAlpha’s Jessica Pothering is moderating a discussion on deploying catalytic capital in emerging markets, with Laurie Spengler of Courageous Capital Advisors, Maria Smith and Sarah Marchand of British International Investment, MedAccess’s Michael Anderson, and Raghuram Talluri of Loadshare, at BII’s London office and online at 11am ET / 4pm London.

Social Finance is hosting an update on its Impact First Fund, Thursday, Dec. 5 (see, “Social Finance taps donor-advised funds for impact-first investments”)… Climate United will host a webinar this Friday, Dec. 6, on Climate United NEXT, its pre-development grant program to help nonprofits, tribes, state and local governments and schools to accelerate early-stage clean energy projects… Also on Friday, The Freedom Economy will host a virtual discussion on the legal path forward for race-conscious investing and grantmaking with Alphonso David of the Global Black Economic Forum.

Next week, Fran Seegull of the US Impact Investing Alliance will moderate a webinar on how inequality impacts investment portfolios, with Oxfam America’s Irit Tamir, Delaney Greig of University Pension Plan Ontario, and Rights CoLab’s Joanne Bauer, Thursday, Dec. 12. 

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Dec. 3, 2024