SOUTH AFRICA: three banks to raise $1 billion for the energy transition

South African financial institutions Standard Bank, Stanlib and Liberty are launching a new fund dedicated to the energy transition in South Africa. This new mechanism will raise $1 billion over the next few years to finance the transition to clean energy.

The energy transition is underway in South Africa, with the support of local investors. Three South African financial institutions have just launched a new investment fund that will focus on the transition to renewable energy in the rainbow nation. The commitment has been made by Standard Bank, which offers its services in 38 countries, including 18 in Africa, as well as by the financial services group Liberty and its subsidiary, the asset manager Stanlib.

The three partners expect to raise 20 billion South African rand (just over $1 billion) over the next few years. Initially, Standard Bank and Liberty will provide seed capital of R3 billion, or more than $158 million. According to Stanlib, which will manage the new fund, “the long-term objective is to facilitate access to the asset class in order to raise capital from institutional investors”.

These include development finance institutions (DFIs), banks, pension funds and others. “The fund will invest in a pipeline of energy transition and project loans of different maturities and in different technologies, such as renewable energy and related clean technologies, to enable Africa to achieve its large-scale energy transition goals,” says Stanlib.

The Johannesburg-based asset manager believes the initiative “will address a range of UN Sustainable Development Goals, including climate action, affordable and clean energy, sustainable cities and communities, and industrial innovation and infrastructure”. The fund is being launched at a time when South Africa is seeking to reduce its dependence on coal for electricity generation. Currently, the southern African country is 80% dependent on this fossil fuel. This is compounded by load shedding caused by the dilapidated state-owned thermal power stations operated by Eskom.