DFC commits $40m to Energy Entrepreneurs Growth Fund
The US International Development Finance Corporation (DFC) announced a participation of up to $40 million in the Energy Entrepreneurs Growth Fund (EEGF), in a mix of junior and senior notes. EEGF offers catalytic financing and technical assistance to early and growth-stage companies that increase access to clean, safe, dependable, and affordable energy for off-grid households and businesses in sub-Saharan Africa.
The EEGF was created in 2019 by UK charity Shell Foundation (co-funded with UK aid from the UK government) and FMO, the Dutch entrepreneurial development bank. In January of this year, FinDev Canada announced its commitment to EEGF. DFC’s announcement complements last month’s commitment by the Nordic Development Fund and brings commitments to EEGF to $106 million.
EEGF is managed by Triple Jump, an Amsterdam-based impact-focused investment manager, with Persistent acting as investment advisor to the fund. The fund focuses on access to energy in the broad sense, including rent-to-own and energy-as-a-service operators. It also supports enablers in the sector, such as software providers, retailers, and other distribution businesses.
“DFC’s investment in EEGF will support businesses that provide access to energy to those who currently lack basic services across sub-Saharan Africa. By providing additional capital for this transformational work, EEGF will dramatically improve lives in communities in the region and spur economic growth and development,” said Scott Nathan, chief executive officer at DFC.
“Collaboration between international growth capital providers is key to scaling clean energy businesses serving underserved customers,” said Jonathan Berman, CEO of Shell Foundation. “Having co-created the EEGF in 2019 and signed an MoU with DFC in 2021, this deal announcement represents evidence that collaboration can widen pools of investment opportunities for commercially-minded investors, and provides a capital continuum that meets the needs of business in emerging markets and accelerates their ability to scale and positively impact the lives of millions of people.”
The fund is designed to provide patient, flexible capital, with a focus on mezzanine instruments, combined with technical assistance that is currently lacking in the off-grid energy ecosystem. EEGF has already been investing and expects to have 10 companies in its portfolio by the end of 2022, representing a total investment commitment of $31.5 million. In addition to mezzanine capital, the fund provides equity and debt instruments to achieve tailored solutions that meet the changing needs of growing energy companies. With a fund life of 12 years, EEGF provides a longer investment holding and support period, recognising the inherent need for such businesses in emerging economies to unlock value creation to their stakeholders.
Steven Evers, CEO of Triple Jump said, “Recent market shocks such as Covid-19 and the increases in food and energy prices are hitting the world’s poorest the hardest. Providing access to clean, renewable, and reliable energy is one change we can make to improve lives. EEGF has already invested in seven businesses, using bespoke capital solutions to meet these enterprises’ specific needs. The fund ultimately aims to reach in excess of five million beneficiaries, including over 240 female-led businesses, and avoiding 4.5 million tonnes of greenhouse gas emissions.”
Palladium supported the early design of the EEGF and acted as the sole transaction advisor on the capital raising.