Evolution One, a new 10-year private equity fund launched by Cape Town-based investment management company Inspired Evolution, aims to raise R1-billion ($120-million) for the development of technology for clean energy generation, water purification and waste management in South Africa.
Evolution One intends to have its R1-billion capital in place by mid-2009. Inspired Evolution’s executive director Christopher Clarke expressed confidence that the fund would reach this target, and added that a follow-up fund would be started in three to four years.
Evolution One is said to be South Africa’s first investment fund devoted solely to green technology, and plans to make between 10 and 15 investments over the next three to five years, all centred on environmental issues. Investments in the Southern African Development Community will receive priority, and reports say that 75% of the capital will be invested in South Africa with the rest spread around countries such as Lesotho, Angola, Swaziland, Zambia and Mozambique.
To date the fund has received some R400-million ($46-million) in backing from the Swiss Investment fund for Emerging Markets, the Finnish Fund for Industrial Cooperation, Castleway Properties (part of the Tchenguiz Family Trust, headed by property tycoon Vincent Tchenguiz), and the World Bank's International Finance Corporation.
Global investment in clean technology is predicted to soar to over $226-billion by 2016, mostly from funds raised by private equity and venture capital. In 2007 alone it is estimated that $150-billion was invested in the green technology sector, excluding Africa and Latin America.
Evolution One has identified a number of focus areas for investment, including clean energy generation and energy efficiency; cleaner production technologies and processes; air quality and emissions control; water quality and management; waste management; agribusiness and forestry; natural products, organics and natural health; and sustainable buildings and environmental real estate.
Inspired Evolution has announced that it is currently in the process of seeking a second round of international and local investors.
The International Finance Corporation’s director for private equity funds Haydee Celaya said the investment into Evolution One falls in line with the World Bank’s strategy to back technologies that address environmental issues and to ensure that the projects it supports embody principles of environmental sustainability..
"This demonstrates our commitment to being a leader in the clean energy and climate change sectors,” Celaya said, “and to providing support to smaller businesses that are not likely to receive funding from mainstream private equity groups."
A report from Times Online says that the World Bank is dipping into profits from the arms industry, raised from lucrative deals struck between European and American defence companies and emerging economies, to fund its Evolution One backing.
The organisation is taking advantage of a system known as off-set, which is a feature of most large-scale global defence contracts. Up to 6% of the value of a deal with a foreign government is added to the base price and used to invest in education or health, but lately the trend has been for governments to use the off-set payment to develop green technologies.
Evolution One has wasted no time in embarking on a round of talks with Eskom, South Africa’s national power supplier and the largest electricity utility in Africa.
Eskom generates almost 90% of its power from coal and in its 2008 annual report, released in September, it states that its greenhouse gas emissions had increased from 208.9 million tons in 2007 to 223.6 million tons in 2008. The report covers the period from March 2007 to March 2008.
Eskom also mentioned in the report that it planned to reduce the amount of electricity generated from coal to 70% in the next 20 years.
Clarke said talks are focused on alternative power supply projects. "We've had discussions with some of Eskom’s treasury members on how to finance alternative forms of energy," he said, “particularly the concentrated solar power plants that they're looking to set up, and co-generation and solar thermal [projects]."
A new initiative to develop a South African carbon dioxide storage atlas was announced in October 2008. The project is supported by petrochemical producer Sasol, Eskom, mining house Anglo American, and the Petroleum, Oil and Gas Corporation of South Africa, PetroSA.
South Africa is a major global culprit in the emission of greenhouse gases, emitting about 400-million tons of carbon dioxide (CO2) every year. This is about 1% of the global total. The new environmentally-friendly scheme will entail capturing CO2 as it emerges from industrial flues, then compressing it under intense pressure to a liquid and injecting it into suitable geological formations such as coal seams or spent oil and gas fields.
Experts have already identified potentially suitable areas from preliminary studies. The Karoo Basin has been named, as have the depleted oil and gas structures in the Mossel Bay area. An initial assessment is on the cards for publication by April 2010.