Impact-focused manager expands in Africa and Asia, plans solar energy debt financing fund.
Sustainable investment specialist Mirova has advanced its emerging markets strategy with the acquisition of SunFunder, a Kenyan private debt manager focused on renewable energy investments in Africa and Asia.
Mirova, an affiliate of French-based Natixis Investment Managers with €27.2 billion in assets under management, said the acquisition was part of a strategic plan to develop its emerging markets investment platform.
“As Mirova has the objective to become a global leader in impact investing, in particular in the energy transition space, it made a lot of sense to have a presence in the emerging markets,” said Raphael Lance, Mirova’s Head of Energy Transition Funds. “SunFunder shares the same values as Mirova, and a common vision on emerging market development”.
SunFunder finances renewable projects in the emerging African and Asian markets and since its foundation ten years ago has closed over US$165 million in investments across 58 countries. Its clean energy projects have included village mini-grid projects in Kenya, off-grid solar home systems in Malawi and industrial rooftop installations in Thailand and Nigeria. Across Southeast Asia, East and West Africa, SunFunder claims to have improved access to solar power for more than ten million people.
Mirova intends to retain the entire primarily Nairobi-based SunFunder team, 55% of whom are female and 45% are African, to keep expanding their high impact energy transition work and collaborate on building a broader emerging markets platform dedicated to clear energy and climate investments.
“Considering the importance of having boots on the ground and specific expertise, it made a lot of sense to take the acquisition route”, Lance told ESG Investor. “Its geographical footprint in Africa and Asia was a good fit for Mirova’s expansion, as we have no African presence and could merge our small Singapore office with that of SunFunder’s [and] in addition to energy transition can help grow our natural capital business in particular in Africa.”
According to report published last year by the International Energy Agency, the annual clean energy investment in emerging and developing economies needs to increase at least seven-fold, from less than US$150 billion in 2020 to more than US$1 trillion by 2030 to put the world on track to reach net-zero emissions by 2050.
Already well established in impact investing in Europe through its investment strategies in energy transition infrastructure, private equity, social impact investing and listed equities, the acquisition is one of a number of moves by Mirova to accelerate its commitments in emerging countries. The first objective of the new partnership is to launch a 70– project US$500 million solar energy debt financing fund across Africa, Asia and Latin America, which aims for a first closing by the end of the year.
“The fund’s structure will be a layered fund, with junior ‘first loss’ investors, development finance institutions and senior tranches. As such, it offers the opportunity to institutions to address this market which has a high impact component with a good level of risk protection”, said Lance. “We believe that the demand for such structures is increasing and Mirova-SunFunder combined can provide a solution to institutional requirements.”
SunFunder’s Co-founders, Audrey Desiderato and Ryan Levinson, said: “There are very few companies like Mirova and SunFunder leading the pack with 100% truly sustainable investments. Together we will become the leading clean energy and climate investor in emerging markets, through bold new investments with real impact.”