Inspired Evolution exits renewable investments and is on track to raise $250m Evolution II
- GAIA Infrastructure Capital
- TriAlpha Investment Management
- Inspired Evolution
- Fifth Season
- Old Mutual Investment Group
- European Investment Bank (EIB)
- 5MW Slimsun Swartland Solar Park in South Africa
- 80MW Kouga Wind Farm in South Africa
- 75MW Solar Capital De Aar solar in South Africa
- 138.6 MW Cookhouse Wind Farm in South Africa
Related M&A Transactions
Inspired Evolution, has successfully exited a number of its renewable energy investments held in its Evolution One Fund portfolio.
Evolution One is a US$90 million specialized fund that completed its final close in 2010, capitalized by local and offshore investors. The focus was on clean energy and environment sectors, backing proven technologies and strong teams in infrastructure-type investments and related value chains.
Evolution One’s stake in three of the assets was sold to an entity controlled by clients of TriAlpha Investment Management, facilitated by Gaia, an active secondary market player in the infrastructure sector.
These were the 5MW Slimsun Swartland Solar Park, the 80MW Kouga Wind Farm, and an indirect interest in Fifth Season (a black empowerment holding company) that holds a stake in the 75MW Solar Capital De Aar solar photovoltaic project. Evolution One’s indirect stake in the fourth asset, the 138.6MW Cookhouse Wind Farm, was sold to Old Mutual Life Assurance Company (SA) Limited, the latter an existing shareholder.
This sale of a combined 300 MW of operating clean energy power plants has materially contributed to the stellar return performance for Inspired Evolution’s investors against comparable global 2008 vintage fund benchmarks. Its returns make it one of the stand-out performers in its specialized clean energy and climate-related sector, globally. The successful exit of these four assets and other earlier exits has allowed Inspired Evolution to return Evolution One’s entire capital back to its investors – all in just over six-years from its final close.
Christopher Clarke, Co-Managing Partner of Inspired Evolution, sees the sale as a major milestone:
“We are delighted that the substantial time and effort invested to actively develop greenfield renewable projects with our joint venture development partners, to successfully de-risk them through construction and commissioning, and then to optimize asset and environmental and social performance during operations in preparation for an exit to the secondary market, has paid off. The competitive sale process run has been complex in this highly regulated sector, but the result is reflective of the team’s value add, and the bankability of the South African renewables initiative. We are looking to adapt and replicate our successful active investment management approach, strengthening our position as a leading equity partner in the region with proven credentials.”
Inspired Evolution has built a credible track record having been involved in 913MW of renewable energy generation projects with multiple successes under a fiercely-contested procurement environment. Inspired Evolution is now pursuing a pipeline of new clean energy projects across sub-Saharan Africa at various stages of development. Moreover, this exit milestone comes simultaneously with the first closing of Inspired Evolution’s successor fund, Evolution II.
Evolution II achieved its first closing in late December 2016 having raised US$90 million from international investors, comprising one remaining investor commitment conditional on a final approval in early March 2017. Evolution II is targeting US$250 million for a final closing by end of 2017.
Co-Managing Partner, Wayne Keast, said that the first closing milestone had been reached within 12 months after formally going to market and that the fund’s investors comprised a mix of strategic international DFIs, specialised fund-of-funds, and a family office. Keast elaborated:
“Evolution II’s investors in the first close are Quantum Power, an Africa focused power, energy and infrastructure investment platform affiliated to a large global industrial, energy, chemical and shipping group; and a stable of policy-driven international development finance institutions (DFIs) comprising the Global Energy Efficiency and Renewable Energy Fund (GEEREF), advised by the European Investment Bank Group; the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO); and the Swiss Investment Fund for Emerging Markets (SIFEM AG). In addition to these four investors, a fifth investor has committed in-principle funding to the first close and is in the final stages of its approval. This is a promising start and well synchronized with the successful exits under our first fund.”
Evolution II is a 10-year closed-ended fund with a mandate for equity and equity-related investments into two principle investment streams: development and project finance infrastructure-type investments in clean and sustainable energy; and growth equity investments in energy and resource efficiency companies, and the value chains that support them.
Evolution II targets sub-Saharan African countries where growth prospects, ease of doing business, policy and regulatory certainty, and political stability and bankability offer compelling investment opportunities. The fund will contribute to addressing the growing need to replace ageing and inefficient carbon-intensive power plants as well as contribute to building least-cost, low-carbon clean and sustainable energy generation capacity to address the estimated 130 GW suppressed demand across sub-Saharan Africa’s high-growth countries.
Evolution II will also contribute to the need for improved energy and resource efficiency measures across business activities that span key sectors in sub-Saharan Africa. These sectors are experiencing growing energy and resource insecurity. Within this changing resource landscape, the responsible deployment of capital to companies that are ‘doing more with less’ is a compelling private equity growth story. Most business activities are located within the food, energy and water nexus that informs the climate mitigation and adaptation response priority within sub-Saharan Africa, and includes transport, industry processes and supply chain logistics.
Matty Vingerik, CEO of Quantum Power, the fund’s cornerstone investor with operations in Ghana, Kenya, Mozambique, Namibia, Nigeria, Rwanda, Senegal and South Africa said:
“We look forward to supporting the Inspired Evolution team over the next decade and complementing it with our Africa growth platform as it consolidates its market position as one of sub-Saharan Africa’s leading clean and sustainable energy investment advisory businesses.”
Evolution II will look to provide investors with long-term capital growth through investments with significant minority or controlling equity and equity-related stakes. Where possible, the Fund will also look to provide inflation-indexed yields to investors from its operational assets for the duration of the investment holding term of the Fund.