Climate Fund Managers commits $86.2m to South African water project
CFM has approved a $86.2 million mezzanine debt investment to support the first two stages of the Olifants Management Model Programme.
** For the best experience, download the free Africa Private Equity News app Android | iOS **
Climate Fund Managers (CFM) has approved a $86.2 million mezzanine debt investment from the Construction Equity Fund of its Climate Investor Two facility to support the first two stages of the Olifants Management Model Programme (OMMP) in South Africa’s Limpopo Province.
The OMMP is a major bulk water initiative designed to address one of South Africa’s most persistent infrastructure challenges: the shortage of reliable water supply in regions experiencing rapid industrial expansion, population growth and climate-related drought. The OMMP is being developed by the Badirammogo Water User Association (BWUA), with the aim of expanding bulk raw water supply to commercial and industrial users, as well as potable water supply to communities.
To accelerate delivery, BWUA is collaborating with government and private sector partners and financiers, including CFM, to mobilise the expertise and capital required to implement the OMMP. The first two stages will expand the region’s bulk raw water backbone through new pipelines, water treatment works and supporting infrastructure, alongside renewable energy systems that will power the most energy-intensive components.
Darron Johnson, regional head for Africa at Climate Fund Managers, said: “The OMMP tackles a long-standing barrier to South Africa’s development: securing reliable water supply in a region that is both economically important and increasingly exposed to climate-related water stress. This investment demonstrates how blended finance can accelerate the delivery of essential infrastructure where it is most needed. The mezzanine facility plays a catalytic role by enabling the full financing package required to advance construction of the OMMP’s first two stages. Through the OMMP, we are helping build climate resilience, safeguard jobs across the mining value chain and expand access to safe water for households throughout Limpopo.”
Want to know who is raising, investing, and exiting in Africa? Get Africa Private Equity News’ monthly Dealmaker’s Log – a database of reported investment deals, exits, and fundraising closes. Subscribe now
Smart structure using mezzanine debt for critical infrastructure like this. The blended finance approach CFM is using here addresses a real bottleneck, water scarcity is already limiting industrial expansion in Limpopo and climate stress will only make it worse. Mezz fits nicely in the cap structure for projects that generate stable cash flows but need patient capital. Only question is whether the renewable energy component (powering water treatment) creates execution risk, integrating multiple infrastructure systems tends to cause delays and cost overruns especially when coordinating across governemnt and private partners in SA.