The fund is targeting $200 million to invest in energy efficiency and clean energy value chain companies
International Finance Corporation (IFC) – the financial arm of the World Bank – has proposed an equity investment of up to $15 million in South Asia Growth Fund II (SAGF II), L.P. The fund’s offshore sponsor is GEF Capital Partners, a Delaware limited liability company.
The investment is capped at 20% of aggregate commitments, with an equivalent amount of co-investment envelope in SGAF II, a limited partnership organized in Ontario, Canada.
The fund will engage GEF Capital to carry out certain investment management and administration duties.
The fund is targeting $200 million in aggregate capital commitments to invest in eight to ten companies focused on energy efficiency, clean energy value chain, water recycling and efficient delivery, and environmental products and services in India and Bangladesh.
The fund will not invest in coal-related activities and higher-risk businesses, including involuntary resettlement, risk of adverse impacts on indigenous peoples, significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or significant occupational health and safety risks. In September last year, IFC had advised its clients in the financial sector to scale up their climate-related lending, cutting their exposure to coal to zero or close to zero by 2030. The Corporation already excluded its coal-related investments from its loans.
IFC aims for project-level outcomes such as access to equity for small to mid-cap companies in India and increased environmental and energy efficiency within targeted sectors in India through the latest investment program.
The market creation outcome is linked to the fund’s portfolio companies’ ability to promote and scale resource efficiency and technology solutions. IFC’s $15 million long-term equity backing will help the fund reach its target final close.
In April this year, IFC had proposed a $50 million (~₹3.65 billion) loan facility to Italy-based Enel Green Power to fund its solar project in Rajasthan’s Bikaner. The 300 MW Thar Surya solar photovoltaic project is being developed by Enel Green Power India, one of the step-down subsidiaries of Enel Green Power, an existing global client of IFC.
In January 2020, the IFC announced its plan to lend $36 million (~₹2.57 billion) for a 250 MW solar project by Mahindra Renewables Private Limited in Rajasthan’s Jodhpur. It is part of the Solar Energy Corporation of India’s 2 GW interstate transmission system-connected solar project auctioned in 2018.