CFM is a leading climate-centric blended finance fund manager backed by FMO, the Dutch Development Bank, and Sanlam Infraworks, part of the Sanlam Group of South Africa. The company invested in Release via its Climate Investor One (CIO) fund; a blended finance vehicle focused on renewable energy infrastructure in emerging markets. CFM will contribute USD 55 million in equity for a 32% stake in Release. Scatec, a renewable energy frontrunner in emerging markets, will retain the majority shareholding of 68%. CFM will also provide shareholder loans totalling USD 47 million, part of which will be on concessional terms.
“We are very excited to have Climate Fund Managers join us as a partner to accelerate the significant growth potential of the Release platform. Scatec is establishing a strong partnership and has raised external financing through a value accretive transaction to fund Release’s growth ambitions. Release is offering a unique renewable energy solution in a rapidly growing market segment that requires a different business model than Scatec’s larger scale project business,” says Scatec CEO, Terje Pilskog, who is also the Chair of Release.
“Today’s transaction establishes Release as a strong and independent company while Scatec remains the main shareholder and offers services to support Release and drive synergies in the next phase of the company’s development,” adds Pilskog.
Release is experiencing good traction in the market, particularly towards African utilities. It has projects in operation and under construction in Cameroon, South-Africa, Mexico, and South-Sudan with a total capacity of 47 MW solar PV and 20 MWh of battery storage and has additional contracts for 35 MW solar PV and 20 MWh of storage in Chad, in addition to maturing its advanced pipeline. Release intends to replicate its rapid deployment model to address shortfalls in local grid power supplies throughout the region.
“We are excited to have a partner as strong as CFM on board and one who shares our view of the potential and aspirations for our business concept. The new shareholder funding will be supplemented by Release through additional debt and guarantee facilities that are currently in advanced negotiations. This gives us the financial foundation we need to meet the strong demand for our flexible leasing model, for easily deployable renewable power plants,” says Release CEO, Hans Olav Kvalvaag.
“CFM’s purpose is to help end the climate crisis. We do this by raising and deploying cutting-edge blended finance funds at scale and at pace. Our blended finance model facilitated the integration of impact finance into the deal structure, which Release will be able to leverage to improve its cost structure for its battery and grid connection solutions, allowing Release to offer even more competitive pricing and better value to its clients. We are delighted to support the Release team as they roll-out their critical climate technology across Africa, helping significantly reduce the emissions of the mining and utility sectors,” says CFM CEO, Andrew Johnstone.
After closing of the transaction, Release will be accounted for as a joint venture investment in the group accounts of Scatec, which will generate an accounting gain of approximately USD 40 million in the consolidated financials at closing. There will be no impact on the proportionate financials from the transaction. Closing of the transaction is expected in the third quarter of 2023, subject to customary conditions precedent.
Rand Merchant Bank (“RMB”), a division of First Rand Bank Limited, acted as the sole financial advisor to Scatec on the transaction.
