DBSA in R3-billion UN green energy deal

Pacific Investment Management Co has agreed to lend a South African state development bank R3-billion, the first deal in a United Nations programme to fund green energy in Africa.

The debt securities from Pimco, which manages US$2.2-trillion in assets, will be used to refinance debt that the Development Bank of Southern Africa has in renewable projects, with the funding to go toward investing in additional capacity.

There is “ongoing interest from our stakeholders in well-structured products that also achieve tangible progress for sustainable energy development in Africa”, Scott Mather, Pimco’s chief investment officer, said in a statement on Tuesday.

The United Nations Economic Commission for Africa, or Uneca, is running the programme, which aims to see the construction of 10GW of green energy generation capacity. Leaders in Africa, the world’s poorest continent, are pushing for funding to transition away from the fossil fuels their economy’s already use and to build the clean energy they need to power industrialisation plans.

The failure of rich nations to live up to their pledge to provide $100-billion/year to help poor countries combat climate change and transition to green energy has been an impetus for the programme, said Vera Songwe, Uneca’s executive director, said in an interview.

Appetite

“What we thought of was, many years later are we still going to be running after the $100-billion or are we going to try a new and innovative approach,” to bring in the private sector, she said.

A number of other deals are under discussion that could follow South Africa and Pimco had an appetite for an amount four times the size of the initial deal, she said. “There are many more countries that I think now will come behind because everybody waits for the first mover.”

Standard Chartered was the placement agent and structuring adviser in the transaction. Fieldstone Private Capital Group acted as programme advisor and was the transaction originating bank.  — (c) 2021 Bloomberg LP