Social Investment Managers and Advisors (SIMA), a new generation of impact investment manager, has invested close to $90MM into the off-grid solar and financial access sectors through its senior debt fund. The fund fights climate change by creating off-grid energy access to millions of households living with little to no energy access in sub-Saharan Africa and South Asia. To date, the SIMA Off-Grid Solar and Financial Access Senior Debt Fund I (“SIMA Fund I”) has lent to 26 companies who are manufacturing, distributing, and/or financing standalone solar systems in more than 15 developing countries.
The Fund has over 30 investors representing DFIs, institutional investors, faith-based pension funds, foundations, endowments, and individuals. Investors include FMO, the U.S. International Development Finance Corporation (formerly known as OPIC), Church Pension Group, Oesterreichische Entwicklungsbank AG (OeEB), AXA Investment Managers, MetLife, Belgian Investment Company for Developing Countries (BIO), Banque Internationale à Luxembourg, Mercy Investment Services, Heifer Foundation, Wallace Global Fund, and Fundación Netri.
The SIMA Fund I offers a double bottom-line investment for this wide array of investors. The senior tranches benefit from ample credit protection (up to 60%) while bringing the scale of capital necessary to grow the off-grid solar sector. The junior tranches allow mission-driven, impact investors to leverage their money more than 14 times. The fund also employs a guarantee from African Guarantee Fund for Small and Medium-sized Enterprises (AGF).
John R. Angelica, Managing Director- Head of Fixed Income Investments at the Church Pension Group commented “the SIMA Fund was an appealing investment opportunity for the Church Pension Group because it simultaneously provided an attractive risk-return profile while offering measurable social impact.”
The Fund benefits from a grant from USAID, as part of its commitment to Scaling Off-Grid Energy (SOGE) Grand Challenge for Development, to promote financing of younger off-grid solar distributors by creating an additional USD 1 million layer of protection in the capital structure.
In addition to providing financial returns with robust protection, the SIMA Fund has three social goals: 1) create 1 million new energy connections, 2) avoid 4 million tons of CO2eq emissions, and 3) promote an industry-wide code of conduct focused on good customer service and protection.
Since the Fund’s inception in October 2017, portfolio companies have created more than 7 million off-grid solar connections that light homes, charge cell phones, and power farming equipment, water pumps, sewing machines, power tools, TVs, radios, and fans. The SIMA Fund’s portfolio companies employ about 14,000 full-time employees and create extra income for 24,000 more people working on a commission-basis.
“The Development Bank of Austria is proud to back the innovative SIMA Fund as it aligns with our mandate to promote positive economic, environmental, and social impact through access to energy to support Bottom of the Pyramid consumers. Off-grid solar solutions are proven to serve the needs of those typically deprived of clean energy access,” said Sabine Gaber, Member of Executive Board at OeEB.
“Off-grid energy companies play a critical role in delivering clean, affordable, reliable energy without the need for grid infrastructure. However, due to the nascent nature of the sector and the associated risks, the availability of capital has been limited in prior years. SIMA has provided a catalyst role by helping early stage companies to increase their market reach in the solar home system sector” says FMO CFO Linda Broekhuizen.
“It is essential that we work towards improving global access to energy without damaging our environment. We have designed the Fund to take an ecosystem approach in order to further the outreach of quality off-grid solar products to the low-income segment,” explained Xavier Pierluca, Managing Partner at SIMA. “The Fund is operating throughout the value chain of the off-grid solar sector; offering adequate financial instruments to design and manufacturing firms down to last-mile distributors operating close to the clients.”
The Fund’s partners include O’Melveny & Myers (US counsel), CMS Law (Dutch counsel), Arendt and Medernach (advised on listing select tranches on the Luxembourg Stock Exchange), Vistra Netherlands (fund servicer), and Ernst & Young (auditor).