Alcazar Energy Partners II Achieves First Closing of US$336.6 Million for Renewable Energy Projects

  • With a target size of US$500 million and an absolute cap of US$650 million, the fund will continue its predecessor’s strategy, focusing on mid-market renewable energy investments.
  • AEP-II will leverage approximately $2 billion in foreign direct investment, including project finance, in emerging markets, creating over 15,000 construction jobs with a focus on local employment
  • The AEP-II portfolio will develop more than 2 GW of clean energy, saving 3.2 million tons of greenhouse gas (GHG) emissions per year, generating electricity capable of powering over a million homes
  • AEP-II projects will allocate $35 million to initiatives tailored to the needs of the communities in which they operate, including women’s empowerment, local skills development and sustainable energy initiatives

COP27, Sharm el-Sheikh, Egypt: Alcazar Energy Partners II SLP (SCSp) (“AEP-II”), a Luxembourg-domiciled sustainable infrastructure fund focused on large-scale renewable energy projects in emerging markets, achieved a first close of 336, $6 million.

This historic transaction will enable the development and construction of more than 2 GW of clean energy infrastructure in selected emerging markets. AEP-II aims to achieve total production equivalent to powering more than one million homes and saving approximately 3.2 million tonnes of greenhouse gas emissions.

AEP-II investors include the European Bank for Reconstruction and Development (EBRD); the European Investment Bank (EIB); EMCAF, a fund managed by AllianzGI and advised by the EIB; the International Finance Corporation (IFC), a member of the World Bank Group; the Asian Infrastructure Investment Bank (AIIB); the German Development Institution (DEG), member of the KfW group; the French Development Finance Institution (Proparco), partly owned by the French Development Agency (AFD); and the Dutch Entrepreneurship Development Bank (FMO).

AEP-II has already signed its first Memorandum of Understanding (MoU) with the Egyptian government to invest in a green hydrogen-based ammonia facility with a capacity of 230,000 tons/year supplied by a dedicated energy plant. renewables of 1 GW. A number of investment grade European and Asian buyers have expressed strong interest in providing a purchase agreement for the project.

Since 2014, Alcazar Energy’s first vehicle, Alcazar Energy Partners (“AEP-I”), has deployed $240 million in equity capital and mobilized total foreign direct investment of more than $700 million in seven solar parks and wind farms in Egypt and Jordan, creating more than 4,200 construction jobs and generating electricity capable of powering more than 350,000 homes.

In 2018, AEP-I developed the largest private renewable energy portfolio in the MENA region at the time, demonstrating that renewable energy in emerging markets can deliver the stable long-term returns sought by institutional investors. The regulatory environments that countries like Egypt and Jordan have developed in recent years allow disciplined managers to mobilize institutional funding on a larger scale.

Alcazar Energy’s strong track record in the development and construction of renewable energy projects, its expertise in emerging markets and its commitment to ESG best practices have all contributed to the success of the first close of AEP-II, which makes following the acquisition of the AEP-I portfolio by China Three Gorges South Asia Investment Ltd in the second half of 2021.

Daniel Calderon, co-founder and managing partner of Alcazar Energy, said: “AEP-II’s first successful closing is a tribute to the disciplined and responsible work of our Alcazar team, who created, developed and exited AEP-I’s portfolios, creating value for investors and, more importantly , for countries and communities where AEP-I has invested.

“The AEP-II is privileged to have the confidence of an exceptional group of public and private institutions to invest and grow in renewable energy projects, mobilizing over $2 billion in foreign direct investment from OECD economies to build sustainable infrastructure where it is most needed.

Nandita Parshad, EBRD Managing Director for Sustainable Infrastructure, said: We are excited to scale up renewable energy to accelerate the green energy transition in the EBRD region by committing up to US$80 million to the new Alcazar Energy Partners II fund. This joint investment will strengthen the resilience of financial markets by diversifying sources of financing for renewable energy assets. It also goes promote the representation of women within the workforce of Fund companies.

Ambroise Fayolle, Vice-President of the EIB commented : “To achieve the Paris climate goals and strengthen global energy security, global energy systems must decarbonize as soon as possible. To do this, the financial system must mobilize trillions of dollars from private sector green energy projects. I am delighted that today we are announcing the investments of EMCAF and EIB Global in the Alcazar Energy Partners II fund. This support will help attract new investor contributions and ensure that the fund plays an important role in accelerating the green transition in its countries of operation.

Tobias Pross, CEO of AllianzGI, added: “Emerging markets are where money for climate change adaptation and mitigation is most needed and where it will have a much more immediate impact than in developed countries. I am proud that our EMCAF investments are now gaining momentum. on the ground in emerging countries, not only to fight climate change, but also to support healthy economic growth in this region. We are grateful to the EIB for leveraging this investment, and we want to deploy it others of this type soon in other countries as well.

Khawaja Aftab Ahmed, IFC’s regional director for the Middle East, Pakistan and Afghanistan, said:

“We cannot fight climate change without unleashing the power of the private sector. This flagship investment harnesses that power, supporting climate adaptation in countries on three continents. We are proud to partner again with our long-time partner Alcazar. Not only to help accelerate the transition to renewable energy and decarbonize electricity, but also to create thousands of jobs and make energy more affordable in the process.

Konstantin Limitovskiy, AIIB Vice President, Investment Operations (Region 2), said: “We are delighted to be part of the first closing of AEP II and to be one of the main investors in the Fund. We believe AEP II has the potential to add substantial new renewable energy capacity to the Middle East, North Africa and Turkey and play an important role in the region’s energy transition. This investment is a key milestone for AIIB, as the first climate-focused capital investment in the region. The investment is aligned with the AIIB’s key strategic objectives of climate risk mitigation and adaptation, green infrastructure and energy efficiency. We look forward to working closely with AEP II to achieve these critical goals and support the development of green and climate-friendly energy capacity in this important region.

DEG Board Member Monika Beck said:Building and expanding green infrastructure in emerging and developing countries is important to enable sustainable development and help achieve global climate goals. At DEG, we are convinced of this. In cooperation with our client Alcazar Energy Partners – an experienced and proven player – we are therefore committed to realizing other renewable energy projects”

Françoise Lombard, CEO of Proparco, said: “In investing in Alcazar Energy II, Proparco leverages the established regional footprint, cutting-edge technology and operational excellence of the Alcazar Energy Team. Proparco has promoted low-carbon development, resilient to the impacts of climate change, aligned with the Paris Agreement, at the heart of its strategy. Alcazar Energy II strengthens Proparco’s existing renewable energy portfolio. Since 2000, Proparco has financed and invested in 125 energy projects in developing countries representing €3.3 billion in financing and 12.9 GW in installed capacity, all technologies combined (solar, wind, biomass, hydroelectric). The strategy and direction of Alcazar Energy II supports our goal of developing a low-carbon economy with sustainable development and universal access to energy in the countries where we operate. We wish the Alcazar Energy Team much success and Proparco will stand alongside Alcazar Energy to co-invest and support the Fund’s future projects.

Diana Wesselius, Head of Private Equity at FMO, said: “FMO is proud to invest in the Alcazar Energy II fund. With this investment, FMO supports the development of renewable energy, among others in Egypt, Jordan and the wider MENA and ECA region. Alcazar’s investment strategy is committed to SDG 13 (Climate Action) and greatly contributes to reducing carbon emissions. These two priorities are at the heart of FMO’s strategy.

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