The International Finance Corporation will invest in Solar Development Capital, Ltd. (SDC), a 10-year US$30 million private equity fund that will provide growth capital to solar photovoltaic (PV) and PV-related businesses in developing countries. SDC is expected to play an important role in demonstrating to private capital markets and strategic investors the value of expanded solar PV businesses in the developing world.
SDC will make equity, quasi-equity, and debt investments in local companies that provide PV products and services to customers located in non-electrified rural areas. The fund will make investments either directly or through local financial intermediaries. IFC will invest $5.5 million in SDC and is also managing a $10 million commitment to SDC by the Global Environment Facility (GEF), which provides grants and funds to eligible projects that protect the global environment.
SDC is part of the Solar Development Group (SDG), a rural electrification initiative that also includes the Solar Development Foundation (SDF), a non-profit entity that provides business development services to local entrepreneurs engaged in off-grid rural PV activities. SDF's founding donors include IFC, the World Bank, Rockefeller Brothers Fund, Rockefeller Foundation, and Joyce Mertz-Gilmore Foundation. SDF began operations in early 2000. To date, SDF has identified over 200 potential candidates for business development support and has approved funding for more than 10 enterprises in developing countries.
SDC will be managed by Stichting Triodos PV Partners (TPVP), a joint-venture formed by Triodos International Fund Management BV, Environmental Enterprises, and Global Transition Consulting, Inc, who have collectively $280 million under management and broad experience with PV businesses. In coordination with SDF, SDC has identified projects in Africa, Asia, and Latin America.
In addition to IFC, the lead investors in SDC are Triodos Groenfond NV and the Swiss State Secretariat for Economic Affairs. Other investors include AstroPower, Calvert World Values International Equity Fund, Rabo Sustainable Fund BV, Triodos Deelnemingen BV, the Wind Fund Plc, and Environmental Enterprises.
IFC together with the World Bank and a number of leading charitable foundations initiated the SDG program in 1996 to expand financing for enterprise-based efforts that supply reliable electric power using solar PV technology to rural remote areas in developing countries. This initiative drew heavily on the Bank Group's considerable experience with solar PV enterprise financing and its challenges as well as similar experiences of the charitable foundation community. SDG also benefited from the support of the Dutch Government through a project development grant from the Netherlands/IFC Trust Fund.
Mr. Peter Woicke, IFC’s Executive Vice President, said that IFC's financial commitment to SDC, together with the GEF’s substantial contribution, has created a fund structure that has helped to mobilize a significant amount of private capital to support this pioneering undertaking. He added that this effort is highly complementary to both IFC's growing focus on supporting small enterprises in the developing world and GEF's efforts to increasingly engage the private sector in tackling important global environmental issues, such as climate change.
Mr. Mohamed T. El-Ashry, GEF's CEO and Chairman, said that SDC will utilize GEF funding as risk capital to help mobilize new financing from private investors and will play an important role in demonstrating the value of expanded solar PV distribution businesses in the developing world. He added that GEF’s financing will support the climate change mitigation benefits that derive from the expanded use of solar PV for rural off-grid electrification.
The mission of IFC, part of the World Bank Group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives. IFC finances private sector investments in emerging markets, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
In recent years, IFC has been actively seeking to finance a greater number of renewable energy (RE) and energy efficiency (EE) projects and to develop special initiatives to accelerate the market penetration and commercialization of these technologies. IFC's efforts in this area are driven by the significant benefits that RE/EE projects offer from a sustainable development standpoint, including the realization of environmental as well as economic benefits. To carry out this challenging mandate, IFC acts as a GEF executing agency supporting projects that will yield global environmental benefits. For more information on IFC’s activities in renewable energy go to:
http://www.ifc.org/enviro/EPU/Renewable/renewable.htm
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