UNEP Teams up with Asian
and African Development Banks
to Get Seed Financing to Clean Energy Entrepreneurs
October 27 2010: Seed Capital Assistance
Facility helping investors provide early
stage financing to clean energy entrepreneurs
in the developing world.
The United Nations Environment
Programme, the Asian Development Bank, the
African Development Bank and the Global
Environment Facility have launched a Seed
Capital Assistance Facility (SCAF) to help
stimulate renewable energy and energy efficiency
ventures in the developing world.
"Entrepreneurs
can transform markets, but the environment
for entrepreneurship remains weak in many
countries, particularly in the energy sector."
said UNEP's Executive Director Achim Steiner.
New ventures often lack business development
support and seed financing is hard to secure,
he added.
According to ADB President
Haruhiko Kuroda, "Although the financial
markets are now taking low carbon energy
sectors like wind power and solar energy
quite seriously in the Asian region, there
is still reluctance to engage too early."
SCAF addresses these
issues by helping private equity fund managers
provide seed financing and business assistance
to early stage clean energy projects and
enterprise developments.
Donald Kaberuka, President
of the African Development Bank, said that
this facility is helping African entrepreneurs
"jump-start new ventures aimed at solving
the continent's energy deficit." SCAF
is bringing vitality to Africa's high potential
renewable energy sector, he said.
Six fund managers have
been engaged to date in Asia and Africa,
employing a range of early stage investment
strategies.
In China SCAF is helping
fund manager Conduit Ventures set up a clean
energy incubation center with local partners,
such as the Shanghai Science and Technology
Investment Corporation, to provide entrepreneurs
with business development, technology commercialization
support and seed financing. According to
Linda Zheng of Conduit Ventures, "SCAF
is helping us build a domestic platform
for nurturing low carbon technology companies
across China. We expect these centers to
create globally competitive companies targeting
the low carbon economy."
In India work is underway
with Yes Bank to create a syndicate of financial
institutions that will invest seed and follow-on
capital in socially and environmentally
oriented small and medium-sized enterprises.
Mr. Rana Kapoor, Founder / Managing Director
and CEO of Yes Bank, said, "Since inception
we have focused on integrating sustainability
within our business focus and I truly believe
that this opportunity to associate with
SCAF will enable us to further deliver value
to all our stakeholders in accordance with
our Responsible Banking philosophy."
Also in India SCAF is
helping IndiaCo, a fund manager listed on
the Mumbai stock exchange, set up a new
fund targeting the energy efficiency sector.
Two regional funds are
also in development with SCAF support:the
Low Carbon Accelerator Asia Fund and the
E+Co Asia Fund.
In Africa the African
Development Bank has added additional funds
from its own resources to expand SCAF's
reach on the continent. Several projects
are under evaluation, with SCAF already
engaged with the Evolution One Fund in South
Africa to provide seed financing to wind
farm developments along the Eastern Cape
region. According to wind farm developer
Mark Tanton, "SCAF has empowered us
to grow our business by providing access
to scarce early stage financing and ensuring
that meaningful skills transfer takes place
within the country, a critical ingredient
for the long term growth and sustainability
of our business."
The six funds engaged
so far by SCAF are aiming for a total initial
capitalization of half a billion U.S. dollars,
of which $55 million will be for early stage
seed investing. SCAF will invest $10 million
to help get this needed early stage capital
and support to clean energy entrepreneurs.
SCAF in Detail
The two biggest challenges
that investors face in providing seed capital
financing to early stage projects and companies
are the higher transaction costs and insufficient
returns offered by these small, less mature
and more risky ventures. SCAF is designed
to address these two issues, offering investment
fund managers two types of cost-sharing
support for those willing to include a seed
investment window within their overall investment
strategy.
SCAF's enterprise development
support shares costs associated with sourcing
deals, enterprise development services and
seed scale investment transactions. As part
of this arrangement, the fund manager commits
to providing enterprise development services
to qualified local entrepreneurs to identify
and develop a pipeline of early stage clean
energy investment opportunities.
SCAF also offers seed
capital support to offset the hurdle of
higher perceived risks and lower expected
returns when dealing with early stage clean
energy project and enterprise developments.
SCAF support ranges from10% to 20% of each
seed capital investment and is used to cover
some of the elevated project development
costs that normally are financed by the
project developer, such as technical assessments,
environmental impact analyses and other
aspects of the permitting process.
SCAF is implemented
through the United Nations Environment Programme,
the Asian Development Bank and the African
Development Bank, with support from the
Global Environment Facility and the United
Nations Foundation. Technical support for
SCAF activities is provided by the Nairobi
office of the Frankfurt School of Finance
and Management.
More information on SCAF is available at
www.scaf-energy.org
+ More
Interview with Don Cheadle,
Hollywood actor and UNEP Goodwill Ambassador
There's nothing like
a brush with death to concentrate the mind,
and - as actor Don Cheadle tells it - a
narrow escape from a charging rhino got
him thinking hard about biodiversity. He
was visiting an African animal sanctuary
while recovering from knee surgery, which
made walking difficult, when an "almost
fully grown, black rhino" took against
him.
He tried to run away
but: "as I glanced back to see how
close death was, I saw one and a half tons
of angry adolescent rhino, not two feet
away, focused squarely on my back pockets.
With my hobbled leg there was no chance
to outrun him. But I dug deep down, self
preservation taking over, and miraculously,
impossibly managed to scale an eight foot
high fence to my left.
"Sitting up there
on my perch," the star of Hotel Rwanda
continues, "a thought crept into my
head: 'Maybe this charging rhino has it
right. If I were a wild animal watching
my habitat slowly disappear as humankind
encroached upon it further and further,
my water diminishing and my food sources
becoming more scarce as a result of global
warming and the proliferation of pollutants,
I might try to take matters into my own
hooves and take a human being off the count.
Who could blame me?' "
Born in Kansas City
46 years ago, and growing up in Denver,
Cheadle had a "mounting interest"
in the environment from as far back as he
can remember. He recalls wondering, as a
child, where all the waste he produced would
go and was inspired by the open spaces of
Colorado to want to protect them. Later
he lived in Nebraska, where water rationing
was common. These and other early environmental
influences "created a mental landscape",
which inspired him "to care".
And care he does. He
has long campaigned against the genocide
portrayed in the film for which he is most
famous. In 2007 he was awarded the BET (Black
Entertainment Television) Humanitarian award
for services to the people of Darfur and
Rwanda, and, together with fellow actor
George Clooney, was presented with the Summit
Peace Award by Nobel Peace Prize laureates
for their work in the stricken part of the
Sudan.
He practices what he
preaches on the environment, running his
home on solar power and even - as a single-digit
handicap golfer - playing with recyclable
golf balls. And now he is to take his campaigning
to a new level as a Goodwill Ambassador
for UNEP.
He hopes the new role
"will give me the opportunity to learn
more substantively about how countries around
the world are addressing environmental challenges,
and let me use my influence to bring people
together on what should be a no-brainer:
our interconnectedness with our ecosystems
and each other.
"I hope I can use
my position to do more than cut the line
at the airport or get a great seat at a
restaurant (though those are admittedly
really nice perks!) and in my small way
be a voice in partnership with those trying
to be heard and perhaps help push their
efforts over the top. I hope to use my "celebrity"
to motivate and move us back from the brink.
"Scientists believe
that half to two thirds of all species will
be on the brink of extinction by the end
of the century. That is a fact that should
grab all of our attention and shake us out
of our stupor.
"Our leaders should
be making these vitally important issues
their first priority and pouring a majority
of their manpower and resources into stemming
the tide, but alas they are not. We must
take up the fight to see that they receive
the attention they merit - not for some
lofty ideal of preserving a particular habitat
or species because it is 'the right thing
to do', but for the very selfish reason
of ensuring that we, as a species, can go
on.
''For better or worse,
we are all captive on this big blue ball.
If we continue to abuse it, it will abuse
us right back''. The rhino would agree to
that. GL
This interview appears
on the latest issue of Our Planet magazine
and can be found at: http://unep.org/OurPlanet/2010/sept/en/
About Our Planet magazine
UNEP's quarterly magazine
Our Planet features authoritative articles
on the theme of environment and development
by world scientific and political leaders.
Our Planet has an estimated annual print
readership of around 300,000 a year, while
the Internet editions are read by some seven
million people from 118 countries. Our Planet
is published in English, French, and Spanish,
with Korean, Chinese, and Japanese language
versions produced by local UNEP-linked groups.
