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Presentation at the Energy for All Investor Forum
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an impact investing syndicate
Introducing…
A consortium comprising of:
What is our role?
Identify a long-list companies seeking to develop solutions to critical constraints that undermine their ability to work for the bottom of the pyramid
Assess potential viability of their business models & capacity to deliver measurable social impact
With a shortlisted pipeline, we identify investibility gap and deliver technical assistance
Assist the company to understand its financing needs, help them access it locally, and/or introduce them to impact investors
Ensure a social impact monitoring plan, against which we measure our impact
At what stage is ACRE?
Initiated in 2012: so far– Built the investment vehicle and investor awareness– Local pipeline development in 5 countries in Nepal,
Bangladesh, India, Zimbabwe, Malawi, Bolivia– Convened international technical assistance provider
pool
Blueprinting 2014 - 2016: Aim of first deals agreed by end of 2014. US $8 mil portfolio by end of pilot in 2016.
Fully online in 2016: Independence from (tech assistance) subsidies; proof of TA/investment vehicle blend concept.
What we look for in prospects Potential for commercial viability Potential to address constraints in the market systems
they operate (e.g. sectoral innovation, market infrastructure, policy influence)
Clearly identified, measurable impacts on the livelihoods of the poor (special focus on wellbeing of women)
Has limited access to affordable finance Investment needs of US $150k - 2mil. Shows continuous improvement in environmental
sustainability Leadership in place with the latent skills and incentive
to grow the business Not on consortium, investor and country foreign direct
investment negative lists
ACRE and access to energy Current pipeline:
– Solar, anchor-based community lease-to-buy systems (Nepal)
– hydropower grid-connected with 25 % community ownership (Zimbabwe)
Under consideration:– Mini-grid franchising (Malawi)– Carbon financed LPG (Sudan)
Who are the investors?Grants Impact
investorsEthical investors
Commercial investors
Sources Charities, governments, aid agencies, foundations
Impact investment funds, aid agencies, wealthy individuals, trusts
Investment funds, wealthy individuals
Investment funds, individuals, companies
Motivation Focus on impact
“Impact first”: focus on impact, but wish to recover their capital for reinvestment
Focus on profit, but will not invest where ethical criteria not met
“Finance first”: Focus on profit
Investment vehicle
Investor syndicate managed by Challenges Capital
Investors assess prospects on a case-by-case basis
Deal to use blends of equity and loans
Costs covered through syndicate membership fee and sweat equity
8
Measuring impact
On the poor
Improved wellbeing of poor people directly affected by the business
On the busines
s
Improved viability, environment
sustainability and growth of the
business
On market system
s
Greater sustainability, inclusiveness and equitability in the market systems
E.g. # BoP individuals gaining reliable and affordable access to electricity
E.g. Viable demonstrations for programmatic CDM, carbon financing, input in policy formulation
E.g. Subsidy independence and growth
Some reflections so far: Programmatic / systemic approach to sector
change
Complex technical assistance needs can be delivered through multi-partner framework agreement
– Extended periods of coaching investor readiness sometimes necessary
– Big technical assistance bill, up to 35 % of investment deal size. Until investibility and returns are proven, requires co-funding for technical assistance to companies
– Syndicated investors reduce transaction costs while offering tailored hands-on, patient, venture capital
Moving forward
Seeking partners to pilot bottom-of-the-pyramid energy access investing:
– To invest in innovative, bottom-of-the-pyramid energy portfolio within the US $8 mil. pilot portfolio by end 2016
– To support technical assistance to a pipeline of innovative, bottom-of-the-pyramid enterprises/companies of up USD 700,000 up to end of 2016
– To propose further pipeline development partnerships to scale up scope of pilot
