IFC and UK launch renewable fund of funds

The investment arm of the World Bank and the UK government are investing a combined $153m to kick-start the IFC Climate Catalyst Fund, described as a private equity fund of funds targeting clean energy projects across the world.

The International Finance Corporation (IFC), a member of the World Bank Group, and the UK government announced on Friday at the World Economic Forum, in Davos, Switzerland, that they are committing $153 million to the IFC Climate Catalyst Fund.
 
The fund, described in an IFC release as a “private equity fund of funds” will “seek to assemble a diversified portfolio of private equity funds” that target renewable energy projects such as hydropower, solar and wind projects. The IFC said the fund “also intends to make direct co-investments”.
 
The UK government is contributing £50 million (€60 million; $78 million) for the fund, with the IFC chipping in the remaining $75 million.
 
“We hope that the fund will help make the business case for these kinds of investments and encourage additional private sector involvement into innovative climate projects,” IFC executive vice president Lars Thunell said.
 
“Our support will reduce the risk of investing, helping the private sector to tackle this global problem by investing in some of the fastest growing economies in the world,” added Andrew Mitchell, the UK’s international development secretary. 
 
A report in today’s Financial Times (FT) suggests the initiative is aiming to channel some £3 billion of capital to renewable energy projects in a bid to generate more than 7,000 megawatts of energy – about two-thirds of the UK’s current renewable capacity, the paper points out. The FT also suggests the fund is hoping to attract significant private sector backing as its investments begin to come to fruition.