IFC Invests in Fund to Improve Access to Finance for Off-grid Energy Solutions in Africa, Asia

Washington DC, April 1, 2015—IFC, a member of the World Bank Group, and Shell Foundation will invest in a new investment fund dedicated to providing financing to manufacturers and distributors of modern off-grid energy solutions, primarily in Africa and Asia. Launched by responsAbility Investments AG, an independent Swiss asset manager specializing in development investments, the fund will be complemented by a technical assistance facility supported by the Swiss State Secretariat for Economic Affairs (SECO).

The fund has capital commitments of nearly USD 30 million and plans to raise additional capital in the medium term in order to ensure that it is a reliable financing source for companies as they continue their growth path. Shell Foundation, a founding partner, is also a co-investor along with anchor investor IFC and other private investors including Skopos Impact Fund and The Adolf H. Lundin Charitable Foundation. The technical assistance aims at strengthening the operational capacity of client companies of the fund in order to ensure sustainable business growth and maximize development impact.

Commenting on the launch of the new investment fund, Klaus Tischhauser, Co-founder & CEO of responsAbility, said: “In addition to representing exciting investment opportunities, these businesses significantly contribute to development. We are pleased to partner with pioneering investors for our latest fund, which, for its offering, size and pan-regional reach, is the first of its kind.”

Alzbeta Klein, IFC Global Director of Manufacturing, Agribusiness, and Services, said: “Energy costs are a heavy burden for low-income people who do not have access to the electricity grid, both financially and in terms of the health impact. Innovative solar energy-based products can save money for consumers, create employment from manufacturing and distribution, and contribute to reduced pollution and greenhouse gas emissions.”

Simon Desjardins, Portfolio Director – Access to Energy, Shell Foundation, said: “This fund is not only serving a critical need in the market but will also generate a significant economic, social and environmental impact. The fund is expected to impact the lives of nearly 20 million people in the next three years. We also look forward to the fund providing validation to the wider investor community that this market segment is indeed creditworthy.”

Demand for off-grid energy solutions is booming. In Africa the market for solar portable lights alone has grown by 90% annually for the last four years. Innovations in business models, coupled with declines in the cost of components like solar panels, are opening new opportunities for companies to offer affordable, high-quality products that can serve the needs of over 2 bn people worldwide who lack access to reliable and affordable energy. Households in this population currently spend around USD 50 to USD 150 annually on energy sources such as kerosene or disposable batteries for torches. These new affordable and modern energy products provide a range of socio economic, health and environmental impacts to households, businesses and community services such as schools and clinics.

Lack of working capital is a key barrier to faster growth for manufacturers, importers and distributors of such solutions. These companies have difficulty to access debt financing as they usually lack the track-record and collateral required by local lenders. The new responsAbility fund will address this financing gap by providing loans typically ranging from USD 500,000 to USD 3 million to commercially viable business models in the energy access value chain.