Project detail - METIER SUSTAINABLE CAPITAL INTERNAT

METIER SUSTAINABLE CAPITAL INTERNAT

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Who is our client

The Metier Sustainable Capital Fund II is a private equity fund investing in clean energy generating assets and resource efficiency projects and businesses across Africa. The fund is managed by Metier and is expected to reach first close in 2019, having development finance institutions including FMO as anchor investors. Metier Sustainable Capital Fund II is the follow-on fund of the Lereko Metier Sustainable Capital Fund (LMSC).

Funding objective

The Metier Sustainable Capital Fund II targets investments which deliver social and environmental benefits as well as financial returns. The investment mandate is balanced between renewable energy projects (encompassing both grid-tied and distributed generation) and growth capital investments in other resource efficiency sectors such as water and waste, with a unique blend of team skills, experience and networks allowing for a compelling proposition. Compared to the predecessor LMSC, which invested mostly in on-grid renewable energy projects in South Africa, the Fund II will broaden its target sectors and geographic focus across the African continent.

Why we fund this project

By investing in the Metier Sustainable Capital Fund II, FMO seeks to address the market need for energy in Africa in a sustainable and responsible manner, by increasing the production of clean energy and investing in resource efficiency projects. FMO will play an anchor investor role in the Fund II. A successful final closing of the fund means that more risk capital is available for renewable energy and clean technologies in Africa, which is fully in line with FMO's investment strategy.

Environmental and social rationale

Metier Sustainable Capital Fund II will actively contribute to sustainable development through clean energy and resource efficiency in low- and middle-income countries in Africa, that will also generate additional benefits for the local society (e.g. employment, CSR investments). The Fund’ current pipeline consists of pan Africa assets in renewable energy (incl. a mini-hydro platform, solar PV and biomass/waste water to energy plants) and resource efficiency. Overall the Fund is deemed to be category A: although the Fund pipeline mainly consists of B and B+ projects, there are some potential category A projects, as well as B+ projects that might materialize to A. Key risks include land resettlement, biodiversity impacts, occupational and community health and safety, and contextual risks. This will be confirmed by asset specific Environmental and Social Due Diligence (ESDDs) (focusing on IFC PS as well as contextual risks and climate resiliency) that will stipulate stringent IFC PS-based mitigation and compensation measures for sound E&S performance. The Fund manages E&S risks and impacts through a mature and IFC PS-aligned ESMS, together with FMO and the other DFI partners who are actively engaged through an ESG committee. The Fund also has established proper ESG reporting procedures and will closely monitor and manage E&S risks and impacts to secure net positive results or proper compensation in line with Good International Industry Practices. Further, FMO will actively engage with the Fund in an effort to identify and materialize asset-specific value add opportunities, including CSR initiatives.

Website client
http://www.metier.co.za
Region
Africa
Country
Africa
Sector
Energy
Signing date
12/20/2019
Total FMO financing
USD 15.00 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
A