The SIMA Commercial & Industrial Solar Green Bond will finance small-scale productive-use solar projects within the commercial and small industrial (C&I) sectors throughout Africa.
The bond, managed by Social Investment Managers and Advisors LLC (SIMA), would be one of the largest impact driven funds exclusively focused on furthering the C&I solar landscape in Africa by offering short-term corporate financing and longer-term project financing up to 10 years to support the growth of the Small to Mid-size local African developers for individual projects less than 5MW. Moody’s has assigned the highest grading as part of their independent opinion on the Bond’s sustainability.
The bond aims to finance over 220 MW of renewable energy projects with an aim to create sustainable access to energy combined with energy savings, enhancing the value chain efficiency, and reduce carbon emissions by an estimated 4 million tons over the life of the assets. Additionally, this initiative is set to support 44,000 productive jobs and dedicates at least 10% of the fund to double the C&I solar capacity in LDCs.
Alongside OeEB’s USD 10 million investment, additional lenders for the first close include the International Finance Corporation (IFC), the Finland-IFC Blended Finance for Climate Program, the Global Alliance for People and the Planet (GEAPP), the Dutch entrepreneurial development bank (FMO), the German development finance institution (DEG), the Belgian Investment Company for Developing Countries (BIO), the US Development Finance Corporation (DFC), the Shell Foundation, and the Schmidt Family Foundation. SIMA expects a second close led by private sector investors for an additional USD 25 to USD 30 million by April 2024.
“Increasing access to clean, reliable energy is a precondition for sustainable development and at the heart of OeEB’s strategy. While Africa has vast renewable energy reserves, affordable financing to tap into this potential is a major bottleneck. We are proud to team up with SIMA – an impact-driven and experienced partner – to help advance sustainable energy solutions and close the financing gap for small and medium-scale energy assets”, stated Sabine Gaber, Member of OeEB’s Executive Board.
Vinay Bandaru, Partner, SIMA Funds, elaborated, "C & I solar presents a great opportunity to solarize productive use sector and impactful institutions such as hospitals and educational institutions. We are not chasing deals but identifying good developers to partner with and to do multiple projects with them while also providing coordinated technical assistance to help create a sub-segment of SMA developers focused on project less than 5MW. This bond is unique with its ESG numeric scorecard, ensuring a clear, quantifiable impact on environment, society, and governance. Our partnership with OeEB enables us to channel our innovative approach to financing to many interested developers in Africa's Least Developed Countries."
Asad Mahmood, CEO, SIMA Funds stated “SIMA has always been an innovator in the impact investment space. We aim to further our mission of creating value with a social objective for our investors and borrowers. C&I Solar Green Bond will add an additional dimension to our mission of expanding energy access in the underserved markets in addition to our work in the Solar Home Systems (SHS) and mini-grids space.”