Mergence and Third Way in South African renewable energy deal

Posted on: 10 June, 2020 at 5:56 PM

Mergence Investment Managers and Third Way Investment Partners have invested R225 million (about $13.5 million) each to refinance a major renewable energy plant in a remote area of South Africa. The project cannot yet be named for confidentiality reasons.

Both parties to the transaction have strong track records in impact and infrastructure investing on behalf of institutional investors, mainly retirement funds.

Fulufhelo Makwetla, founder and managing director of Third Way Investment Partners says, “We are excited at the opportunity to collaborate with Mergence to co-invest into the struggling South African economy. We still have dry powder close to R1 billion (about $60.3 million) and are looking for opportunities to invest.”

Yoza Jekwa, joint managing director of Mergence Investment Managers says, “The vital role of asset managers in facilitating responsible investing of pensioner retirement saving into viable infrastructure assets is multi-layered and cannot be under-estimated. The asset manager has a fiduciary responsibility to safeguard the monies it invests on behalf of pension funds and their beneficiaries through sourcing, vetting and structuring infrastructure deals, as well as stringent continued oversight of project management.”

Mark van Wyk, head of infrastructure and developmental investments at Mergence Investment Managers says, “The refinancing or secondary investments in an existing project indicates a positive maturation of the renewable energy market in that transactions between project lenders can be executed. It means that the energy projects can be sustained, jobs retained and energy continued to be dispatched into the grid.”

Mergence has raised R1.7 billion (about $102.5 million) for its renewable energy fund, and invested in a total of 14 renewable energy project across both wind and solar, 11 projects of which have been operational for some years. Mergence has raised a total of R3 billion (about $181 million) across other sectors such as affordable housing, ICT, water and sanitation, as well as renewable energy.

Third Way Investment Partners has raised R2.5 billion (about $150.8 million) for its Infrastructure Debt Fund, investing in over 30 projects in the poorest of South Africa’s provinces including Limpopo, Northern Cape and Eastern Cape, and impacting the lives of communities which are frequently are excluded from such opportunities.

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