Sustainability-focused investment manager Mirova announced today the first closing of its Mirova Gigaton Fund, raising $171 million for the blended finance debt fund aimed at accelerate the clean energy transition in emerging markets.
The Gigaton Fund aims to provide medium- to long-term debt financing for clean energy projects, primarily in emerging countries in Africa and Asia Pacific, as well as in Latin America and the Middle East. The fund focuses mostly on small and medium-sized enterprises (SMEs), targeting areas including solar home systems, agri-solar, commercial & industrial solar, telecom tower solarization, mini-grids as well as other promising sectors such as e-mobility, battery storage, climate-smart food systems, energy efficiency and carbon credit pre-financing.
The fund is classified as Article 9 under the SFDR regulation.
Ryan Levinson, Director of the Mirova Gigaton Fund, Head of Emerging Market Energy Transition said:
“Today, more than 770 million people lack energy access in the world4 – mostly in Africa and developing Asia – regions with populations that are also the most vulnerable to the global climate crisis. Addressing climate change requires a reallocation of capital to decarbonizing global economies, particularly a clean energy transition in emerging markets.”
The announcement follows the acquisition last year by Mirova of SunFunder, an emerging markets and blended finance-focused renewable energy finance provider and impact investor.
Blended finance brings together public or philanthropic capital and private funding through a common investment structure, enabling investors to invest in certain types of investments that have high perceived risk profiles, such as new climate mitigation-related technologies. The instruments are designed to attract large-scale institutional capital, allowing public financiers and other donors to use a small amount of their own resources as a first loss to mobilize large amount of private capital to reach large number of underlying climate projects needed.
Mirova said that the fund’s target size is $500 million, and it expects to deploy $1.2 billion of private debt through its life.
Raphaël Lance, Head of Energy Transition Funds at Mirova said:
“As a mission-driven, global responsible investor, we are aware that a large portion of the rise in global power demand will be driven by expanding non-OECD economies. As we have seen growing interest from investors for long-term investments in tangible assets and attractive yield potential, we are confident that the Mirova Gigaton Fund constitutes an interesting opportunity to finance the energy transition around the globe, relying notably on Mirova SunFunder’s expertise and know-how in emerging markets.”