The Development Bank of Southern Africa got the green light to borrow R3 billion for green energy projects from PIMCO, one of the leading fixed income investments managers in the world, as part of the Sustainable Development Goal Seven programme of the United Nations Economic Commission for Africa (UNECA).
The Sustainable Development Goal Seven (SDG7) programme was launched in Addis Ababa in February 2020 to deploy private capital in Africa to support the development of renewable energy. South Africa was one of the initial national sponsors and the Presidency and the DBSA finalised the deal.
The SDG7 programme rests on three fundamental pillars – climate, finance and governance – to ensure that proceeds are exclusively deployed to support the development of renewable energy generation. PIMCO was launched in 1971 in California and introduced investors to a total return approach to fixed income investing.
“The success belongs to South Africa and the DBSA for their single-mindedness in recognising the value of attracting foreign private debt investment into the energy sector and PIMCO for committing to the green energy transition on the African continent,” Dr Vera Songwe, under-secretary general of the UN and executive secretary of the UNECA, says.
Important signal for green energy investors
She pointed out that this first close is an important signal to the many other countries interested in the SDG7 programme, who recognise the value of attracting private capital to support economic growth and green industrialisation.
“We look forward to concluding further transactions as part of the programme in the very near future.”
First close means that a private equity firm can begin investing and closing deals when a certain threshold of money has been raised.
Finance Minister Enoch Godongwana was chairman of the DBSA during the initiation stage, as well as the early stages of what is being called a “landmark transaction”.
“We are grateful to be able to help get this programme up and running for the UNECA. We appreciate the endorsement from private international financial institutions such as PIMCO, who are not only engaged in the South African economy, but also see the particular opportunity in supporting our clean energy transition.”
Scott Mather, chief investment officer of PIMCO, who oversees global sustainability and ESG investments, said the company supported the SDG7 programme from the outset based on the ongoing interest from its stakeholders in well-structured products that also achieve tangible progress for sustainable energy development in Africa and emerging markets.
Standard Chartered acted as placement agent and structuring advisor in the transaction, while Fieldstone acts as the SDG7 programme advisor and was the transaction originating bank.