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SA’s first clean technology private equity fund

01 October 2008 – Inspired Evolution is South Africa’s first clean technology (cleantech) private equity fund, with an initial US$57 million raised offshore, and seeking to attract local investors, management confirmed yesterday.

The advisory board for the fund includes Iraj Abedian, chief executive of Pan-African Capital Holdings, and Dr Anton Eberhard.

Christopher Clarke, executive director, announced that the fund, Evolution One, was ready to invest in electricity cogeneration schemes, solar powered energy and waste management systems in southern Africa.  Clarke said further to private-to-private deals would be the initial aim of the Evolution One Fund and would not involve selling electricity to Eskom, but to private companies.

There would be future opportunities to invest in co-generation projects that sold electricity to the Eskom grid continued fellow executive director Zuko Kubukeli.

Local investors would be sought from pension funds, development finance institutions and bank private equities, Clarke said.

Due to the relative newness of funds such as this to the South African investor, Clarke anticipates that between 65 and 75% of the final fund target will be raised off shore, particularly in the US and Europe, where the markets for these types of funds were more mature.

The initial US$57 million was raised from the International Finance Corporation, the Swiss Investment Fund for Emerging Markets, the Finnish Fund for Industrial Cooperation and privately owned Castleway Properties.

While investment targets were environmentally friendly, the fund would operate on leveraged finance principles with debt-to-equity rations ranging from “50:50 to 70:30 for investments with longer-term cash flow security, such as cogenerated electricity projects with long supply contracts. Risk profiles were expected to be similar to private equity infrastructure projects.”

Globally cleantech is the fastest growing private equity sector after healthcare, he said. According to figures provided by New Energy Finance, $148 billion was invested in cleantech last year.