ARM-Harith Infrastructure Fund has established a distributed renewable energy equity financing platform in AD Power HoldCo, focused on off-grid and interconnected mini-grids as well as captive commercial projects sized at less than 1MW in Nigeria.
The vehicle invests equity and quasi-equity instruments into companies holding projects with small to medium-sized renewable energy off-grid projects, interconnected mini-grids and commercial and industrial projects of less than 1MW in Nigeria.
In a statement seen by BusinessDay, it also seeks to mobilise affordable, long term, local currency debt financing through an investable balance sheet to enable the delivery of commercial debt and debt capital from domestic financial institutions.
The ADP platform has commenced investments with allocations of up to $7 million in two separate SPVs developed by two off-grid developers. Each SPV comprises multiple off grid projects in Nigeria and will create the foundational investments to scale additional investments in projects and SPVs by multiple developers.
According to the statement, the two companies currently serving as recipients of the foundational investments by ADP are Energy Conversion Company Nigeria (ENERCON) in partnership with sponsor, Nayo Tropical Technology, and GVE AssetCo Nigeria Limited (GANL) in partnership with sponsor, Green Village Electricity Projects Limited (GVE).
ARM-Harith’s role in the project included creating the investment structure of a consolidated HoldCo targeted at combating the challenges of small project sizes and fragmented investment space and offering a streamlined transaction process, reducing overall transaction costs.
The vehicle takes advantage of a positive regulatory environment for investments in distributed energy projects for communities to enhance access and supply of electricity. It also consolidates best practice, technology systems to scale distributed energy solutions at a rapid pace.
According to the statement, this investment is in line with ARM-Harith’s mission to invest in sustainable infrastructure projects that support economic growth and development in Nigeria. ADP Holdco is expected to have a positive impact on local communities and the Nigerian power sector, and we are excited to be a key enabler of this important initiative.
“Technical Assistance from African Development Bank ADP is a recipient of a technical assistance grant from the Sustainable Energy Fund for Africa (SEFA) to establish the platform as a $50 million equity financing platform for the distributed renewable energy sector in Nigeria.
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“The technical assistance will go towards enhancing the structuring and operations of ADP to support project delivery. The Sustainable Energy Fund for Africa (SEFA) is a multi-donor Special Fund managed by the African Development Bank. It provides catalytic finance to unlock private sector investments in renewable energy and energy efficiency,” the statement read.