Climate Fund Managers (CFM) announced the launch of the Climate Investor 2 fund (CI2) in late 2019. After two years of fundraising and developing a funding pipeline, CFM is pleased to share with fellow members of the Netherlands Water Partnership (NWP) that the first close of CI2 on 10 November 2021 netted USD 675 million. This gives CI2 the funding it needs to shift gears and begin transitioning projects out of development and into construction.
Building on the successes of Climate Investor 1 (CI1), CI2 is CFM’s second blended finance facility targeting climate infrastructure in emerging markets. While CI1 is dedicated to renewable energy, CI2’s focus includes water and wastewater treatment, waste and wastewater to energy, nature-based solutions and green ports. An interview with CI2’s Investment Manager, Darren Moens, gives an update on project progress and outlines some of the investment opportunities for the Dutch water sector in this fund.
Finance from development through operations
“Broadly speaking, CFM strives to develop solutions to scale up climate investments in emerging markets,” says Moens. “In the case of CI2, this has meant tasking our regional deal teams with sourcing a pipeline of promising water, sanitation and oceans infrastructure projects which directly contribute to the fight against climate change.” One of CI2’s strengths is its ability to provide what they call ‘complete lifecycle financing’. This is an innovative alternative to the traditional project finance approach. It enables CI2 to provide development funding to early-stage projects, equity funding for up to 75% of construction costs, and debt finance for up to 50% of the post-construction debt. CFM also provides technical, financial, environmental, and social governance support. “This approach allows us a great deal of flexibility in the deployment and piloting of new technologies, as well as the deployment of proven technologies into new markets. As an NWP member, we are looking to develop synergistic relationships with Dutch developers who are eager to leverage opportunities arising from CI2,” adds Moens.
Bio2Watt plant in South Africa. The project concerns the development, construction, and operations, of a pipeline of waste to energy plants in South Africa.
Growing CI2 project pipeline
Moens also outlines the CI2 project pipeline which spans the continents of Africa, Asia, and Latin America. “The CI2 pipeline is already very technologically diverse, and the deal teams have been making full use of CI2’s broad mandate,” says Moens. “We have projects tackling wastewater treatment, waste to energy, water treatment, waste to value, desalination plants, non-revenue water, and more.” Similar to CI1, the fund follows the blended finance approach. Through this innovative structuring approach, additional capital for sustainable development in emerging markets is mobilised through the use of development finance.
The launch of the fund has so far resulted in the development of a pipeline of USD 381 million worth of opportunities on the African continent and USD 379 million worth of opportunities in Asia. “This is an exciting time indeed, as we are actively looking to grow this pipeline. We have secured the funding and are expecting more projects to come onstream in the lead up to CI2’s second close. We are now inviting relevant Dutch companies in the water, sanitation and oceans infrastructure value chain to get in touch with us so we can collaborate on these opportunities,” Moens says.