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(Bloomberg) — Revego Fund Managers, which runs Africa’s first fund focused primarily on investing in operating renewable energy assets, is seeking new investors as it works toward an eventual listing.
Chief Investment Officer Ziad Sarang said the fund manager is looking to raise about 3 billion rand ($165 million) to invest in the 2 billion-rand Revego Africa Energy fund, a so-called yieldco focused on dividend streams. It will consider listing when it has about $500 million in assets under management and currently has a pipeline of about 10 billion rand in potential investments, he said.
“We are currently doing due diligence with two investors,” Sarang said in an interview. “The ideal investors at the moment are development finance institutions that will help us grow, along with institutional investors and pension funds.”
The open-ended fund, formed to invest in assets in sub-Saharan Africa, was ready for investment from August 2021. Its initial backers include a joint venture between the UK government and Macquarie Asset Management Ltd. It offers returns to investors while freeing up capital for developers to build new plants.
“We are focused on recycling capital from developers,” Sarang said, adding that a study his company conducted shows the region needs $193 billion in renewable energy investment by 2031. “To raise that amount of investment and broaden the investment base, you really need an efficient financial system that has primary investment and secondary-market recycling of capital.”
In addition to the Macquarie-British joint venture known as UK Climate Investments LLP, Revego’s initial funders include Investec Bank Ltd. and the Eskom Pension and Provident Fund, which manages pensions for workers at South Africa’s state-owned electric utility company.
He said the Eskom fund could invest further, but the other two “cornerstone investors” were unlikely to do so.
“The long-term goal is to eventually get it listed,” Sarang said. “Institutional investors are interested in two things. They’re interested in liquidity and they’re interested in scale.”
Sarang has worked on transactions across the power, mining and infrastructure sectors for 25 years. He is the former Head of Infrastructure at Standard Bank Group Limited and Head of Fund Initiatives at Investec.
While the fund’s focus is regional, all 10 of its investments to date have been in South Africa, which has by far the largest renewable energy industry in the sub-Saharan region.
Last year, the fund invested in a 150-megawatt solar plant in South Africa’s Free State province that will be the first to sell power to a number of private buyers, including miner Sibanye Stillwater Ltd. and brewer Anheuser-Busch InBev NV.
(Ninth paragraph corrected to show that Sarang still works at Investec.)
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