Investec-Backed Green Fund Revego Raising Cash for Africa Drive

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(Bloomberg) — Revego Africa Energy Fund plans to raise as much as 1 billion rand ($57 million) in additional funding as the investor in South African renewable projects seeks to bankroll five wind-power facilities in the nation and several others on the rest of the continent. 

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“We would ideally like to execute 2 billion rand a year, and within five years, if we get ourselves to 10 to 12 billion, that is our target,” Revego Fund Managers Chief Investment Officer Ziyaad Sarang said in an interview.

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The open-ended fund was ready for investment from August 2021 and now has a portfolio of 2 billion rand. Its initial backers include a joint venture between the UK government and Macquarie Asset Management Ltd. known as UK Climate Investments LLP, as well as Investec Bank Ltd. and the Eskom Pension and Provident Fund, which manages the savings of workers at South Africa’s state-owned power utility.

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While the fund has a regional focus, all of its 10 investments so far are in South Africa, which has the biggest renewable-energy industry in the sub-Saharan region.

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“Our target yield is inflation plus 5% to 7%, and we’ve hit that target since inception,” he said. 

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Sarang has spent 25 years working on transactions in the power, mining and infrastructure sectors, was head of infrastructure at Standard Bank Group Ltd. and now runs fund initiatives at Investec. 

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Revego is in talks with a local institutional investor and an international development financier to unlock a further 1 billion rand in investments, he said. It has built a pipeline of as much as 10 billion rand in operational green projects in South Africa, and a further $180 million elsewhere on the continent that is ready for investment.

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“Our issue today is not assets,” Sarang said. “There are too many assets and we can almost cherry-pick those.” The fund is looking at projects in Kenya, Uganda, Namibia and Botswana, as well as one in a West African nation.

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Sarang sees funds like his helping to build a liquid secondary market for institutional investors on the continent, liberating capital that should go toward new investment from being trapped in existing projects that don’t have off-takers. 

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“We want the same players to stop ignoring the secondary market, to deepen the secondary market because that will allow the primary market to churn capital back into investments,” he said.

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Revego would consider listing the fund if assets under management reach $750 million to $1 billion. 

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“You need to be big to attract the big money,” Sarang said. “In South Africa, there isn’t anything very comparable to us, so it’s very difficult for analysts to actually understand and to value us.”

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