Impact managers on this month’s Liist of funds that are actively raising capital highlight the diversity of opportunities for capital to plug in to the clean energy transition.
An estimated $4 trillion in financing is needed each year to support the global clean energy transition. Investments in clean energy infrastructure and technology this year are expected to reach $2 trillion for the first time (along with about $1 trillion that is still being invested in fossil fuel technologies and capacity).
In the US, women-led MAC Global Partners is building on its experience in renewables asset ownership with a planned $600 million fund to make growth equity investments in clean energy companies. New York-based MAC is focusing on North America and Europe, which together attract about 35% of clean energy investment capital.
At the opposite end of the investment spectrum is Fortis Green Renewables, which is in the market with its first fund to help small-scale green energy developers in East Africa develop and build their projects. Based in Rwanda, Fortis observes that the lack of capital is especially challenging for developers of small projects, which commercial investors deem too risky or costly to underwrite.
Only about 15% of clean energy investments are directed to emerging markets (not including China). The need to mobilize private capital for climate resilience and mitigation in emerging markets is increasingly urgent, especially in light of the poor outcome of the COP29 climate finance agreement (see, “Past deadline, COP29 climate talks salvage a meager agreement on climate financing”).
Three other funds on this month’s Liist are ushering capital to underinvested opportunities in emerging markets. All have a climate angle. Catalyst Fund is writing very early equity checks to companies in Africa supporting livelihood resilience and adaptation to climate change. The fund is paying special attention to locally-founded companies, rather than expat-founded companies, which often more easily attract venture capital investors.
Singapore-based Circulate Capital is bringing its plastic waste investment strategy from Southeast Asia to Latin America. Its first fund in the region is making growth equity investments in companies collecting, processing and/or reusing plastic waste to ensure it doesn’t damage coastal and other natural ecosystems.
Both are investing with a gender-lens (see ImpactAlpha’s database of more than three dozen Climate + Gender funds). Catalyst is women-led and looking for 40% of its portfolio to be companies run by women. Circulate has a 30% women-led company target with other gender targets for portfolio companies’ boards, leadership and staff.
And finally Netherlands-based XSML is raising its fourth fund to finance small businesses in Africa’s less-invested markets, like the Democratic Republic of the Congo, Uganda and Angola (see, “XSML raises nearly $100 million to invest in African small and mid-sized businesses”). XSML is watching for emerging green opportunities, particularly waste management and the circular economy.
On this month’s Liist:
- Catalyst Fund’s Climate Resilience Fund I
- Circulate Capital Ocean Fund LAC I
- Fortis Green Renewables Green Fund I
- MAC Global Partners Environmental Fund
- XSML African Rivers Fund IV
Check out ImpactAlpha’s database of more than 150 impact funds that have been featured on The Liist.
Disclaimer: The Liist and this post are based on available information, sourced by ImpactAlpha. Information has not been further reviewed by the managers nor verified by third parties, is not guaranteed for accuracy or completeness, and should not be relied upon as investment advice or recommendations. Nothing in The Liist, this post or on ImpactAlpha.com shall constitute an offer to sell or the solicitation of an offer to buy securities.
Catalyst Fund’s Climate Resilience Fund I
The Catalyst Fund evolved from BFA Global’s high impact tech accelerator programs for African social enterprises. The fund is looking to raise $40 million to make equity and quasi-equity investments in pre-seed ventures addressing climate risks to livelihoods and communities on the continent. Its three investment themes are: climate resilience, sustainable livelihoods and climate-smart essential services. The firm has raised $12 million from FSD Africa as well as family offices, endowments and high net-worth investors.
Catalyst Fund has already inked 22 investments, including Keep it Cool, an Earthshot Prize winner supporting the meat cold-chain in East Africa, and Mazao Hub, an agtech venture working with Tanzania’s smallholder farmers to improve yields. It’s targeting 40% female founders in its portfolio and 80% locally-led ventures.
- Type of investments: Pre-seed equity and quasi-equity, with follow-on investments through Series A
- Fund structure: blended finance fund with a first-loss/philanthropic tranche, and junior and senior equity tranches
- Where fund is domiciled: Mauritius
- Geographic focus: East Africa with eventual expansion to other regions in Africa
- Commitments/investors: $12 million
- Who is eligible to invest:
- Unique fund features: Embedded venture acceleration/building
- Sample impact metrics: supporting 20 million people with improved climate resilience, mitigating one million tons of CO2 emissions, reaching 10 million women, restoring or sustainably managing 25,000 acres of land, creating 3,000 green jobs, conserving 100 million liters of water
- Fund leadership: women-led
- Get in touch online
Circulate Capital Ocean Fund LAC I
Circulate Capital has raised nearly a quarter billion dollars to curb plastic waste, increase plastic recycling. Most of its money comes from large plastic producers and users, and most of its capital—so far—has been directed to Southeast Asia, the region with the biggest plastic waste problem.
But two years ago, the Singapore-based firm started testing the waters for a Latin America-focused fund. This year Circulate made its first two investments in the region, backing Colombia-based Polyrec, a recycler of flexible plastic, such as bags and wraps, and Brazilian PET recycler Cirklo (see, “With investment in Colombia, Circulate Capital brings growth capital to plastics recycling in Latin America”).
Circulate is looking to raise between $80 million and $150 million for its first Latin America fund. It will make growth equity and quasi-equity investments in companies and technologies enabling the collection, sorting and processing of plastic waste while supporting the livelihoods engaged in plastic waste management, particularly for workers in the informal economy.
- Type of investments: Equity and quasi-equity at Series A, B and C stages
- Fund structure:
- Where fund is domiciled: Singapore
- Geographic focus: Brazil, Mexico, Colombia, Chile and the Caribbean
- Commitments/investors: $68 million, with backing from the Inter-American Development Bank, Builders Vision, and corporations
- Unique fund features: Impact-linked carried interest, linked to the total number of plastic prevented from leaking into the environment and/or kept in circulation as a result of the fund’s investments; 2X-aligned fund
- Sample impact metrics: tons of plastic recovered or kept in circulation, tons of CO2e avoided or reduced, tons of waste managed, tons of new infrastructure or capacity added, direct jobs added; gender data related to women’s roles on staff, investment committees, company boards, in senior leadership, suppliers, etc.
- Get in touch online
Fortis Green Renewables Green Fund I
Renewable energy investor Fortis Green Renewables writes equity and flexible “equity-like” checks to renewable energy projects in East Africa. The US-based fund manager is raising its first fund to invest in smaller projects of 0.5-megawatt to 25-megawatt in size, which struggle to raise capital because they’re seen as more risky and costly to underwrite by commercial investors.
Fortis is eying $25 million for the fund and will write checks of $1 million to $5 million in projects that are both in development and under construction. It has so far made four investments, which include a 51% equity stake in a 8.5-megawatt solar project in eastern Rwanda and a $1.5 million investment in Hydrobox, a Kenyan hydro mini-grid developer.
- Type of investments: Equity, preferred equity, convertible notes, mezzanine finance
- Fund structure: close-end 10-year fund with a five-year investment period per deal
- Where fund is domiciled: Delaware, US
- Geographic focus: East Africa with eventual expansion to other regions in Africa
- Commitments/investors: $12.5 million
- Who is eligible to invest: Accredited investors
- Unique fund features: The management team is donating 10% of its take of profits to community initiatives in its investment areas
- Sample impact metrics: CO2 mitigated, clean energy produced, jobs created, as well as households and businesses connected to electricity, among others.
- Fund leadership: Leadership team based in South Africa and Rwanda
- Contact: Jonathan Shafer, [email protected]
MAC Global Partners Environmental Fund
MAC Global Partners provides growth equity to companies supporting the energy transition in North America and Europe. The New York-based investment firm is in the market with its Environmental Fund and a target of $600 million to invest in about 10 mid- to late-stage growth companies in renewables, energy storage, green hydrogen, the circular economy and carbon capture.
The fund is an expansion of MAC Global’s energy advisory group and energy and infrastructure asset ownership and operating group. The latter group owns projects in six countries, including a solar and water project in Israel, a geothermal project in Germany, and a solar-plus-battery project in Ukraine.
- Type of investments: Growth equity with checks of $25 million to $100 million
- Fund structure: traditional 2/20 PE fund
- Where fund is domiciled: New York, US
- Geographic focus: Europe and North America
- Commitments/investors: Everest Global
- Who is eligible to invest: Accredited investors with a $10 million minimum
- Fund features: 10-year fund with a five-year investment period for portfolio businesses; anticipated unlevered returns in the high teens
- Sample impact metrics: focus on carbon reduction and energy efficiency
- Fund leadership: Woman and diverse-led
- Get in touch by email
XSML African Rivers Fund IV
Amsterdam-based XSML invests in small and mid-sized businesses that are providing basic consumer goods and services in Africa’s less-invested markets, such as Uganda, Angola and the Democratic Republic of the Congo. To help risk-wary investors get comfortable with investing in such markets, it disburses proceeds and profits from its investments every few months.
“Getting cash flows back and then distributing to your investors helps investors see that we’re not just putting the money out there – they see money coming back,” XSML’s Barthout van Slingelandt told ImpactAlpha. “If they see those returns increasing fund over fund, it becomes a model people start to trust.”
The firm is back in the market with its fourth fund and a goal of raising $132 million. It notched a first close of $98.7 million in March with backing from International Finance Corp., development finance institutions FMO, BII, Nordfund and Swedfund, and a fund managed by ResponsAbility. Over 40% of the capital has already been deployed.
Its newest backer: the US International Development Finance Corp., which has committed $13 million.
- Geographic focus: Africa
- Fund structure: 10-year fund with a standard five-year investment period and five-year holding period
- Commitments/investors: International Finance Corp., FMO, BII, Nordfund, Swedfund, DFC
- Unique fund features: capital distributions to investor every few months
- Sample investments: Kinshasa-based printing company Quick Print, Congolese hair and beauty brand Zuri Luxury, Ugandan healthcare provider TMR Hospital
- Get in touch online
