Description/achievement of initiative
The overall goal of the Sustainable Caribbean Basin Private Equity Fund (CBPEF) is to foster private investments that promote energy security, environmental sustainability and related economic opportunities in nations across the Caribbean Basin. The Fund will seek to invest in highly innovative investment platforms and business models that expand access to clean and safe energy, that achieve the sustainable use of natural capital, and that generate opportunities for local businesses and low income populations, including women and the indigenous.
The main rationale for this program is two-fold: (i) to promote first-movers in the market, and thereby facilitate broader private investment and innovation in small companies working in sustainability in energy, and (ii) to foster greater economic benefits from clean energy economic growth.GEF funds will facilitate the first closing of Sustainable Caribbean Basin Private Equity Fund (CBPEF) by adding needed resources, and the globally-recognized GEF brand to a list of other high quality investors. The Fund is targeting a capitalization of US$ 50 million, shared by public and private sector contributors, and aims to invest in eight to twelve low carbon projects with an expected internal rate of return to investors of at least 12%. This fund is highly innovative and flexible in the structuring of equity-based financial products, with deal structures aimed at achieving high returns from energy efficiency while reducing GHG emissions. The Management Team has developed a robust pipeline that is designed to optimize investment opportunities according to its investment strategy. The CBPEF general objective is to expand access to the benefits of economic renewable energy, efficiency, and distributed generation for utilities, local industry, municipalities, households, and small and medium size enterprises in the Caribbean Basin. Given their innovative investment strategies, the majority of the early co-funding in the CBPEF will come from multilateral organizations and institutions, such as GEF and the IDB. Having credible and globally recognized partners such as GEF in these funds will facilitate further fund raising, including from co-investors in the private sector. These funds will also attract further private sector interest at the level of investee companies, as some private investors will be attracted to firms in funds supported by the IDB-MIF and GEF.
Arrangements for Capacity-Building and Technology Transfer
The overarching objective of this PPP Fund is to increase private investment in renewable energy, energy efficiency, and other climate change related investments through sustainable business models in eligible countries in the Caribbean Basin. In particular, the proposed Fund will finance investments consistent with the following objectives: i) Promote market transformation for energy efficiency in industry and the building sector; and ii) Promote investment in renewable energy technologies.
Coordination mechanisms/governance structure
The MIF is requesting US$15 million in reimbursable resources from GEF for the Sustainable Caribbean Basin Private Equity Fund (â€œCBPEFâ€). The CBPEF will invest in renewable energy and energy efficiency projects and in small companies with sustainable business models. These funds normally have an average life of 10 years. The first 4 to 5 years of a fund is typically dedicated to locating, analyzing and investing in companies, with another 5 to 6 years for investment maturation and eventual exit.
Global Environment Facility, Inter-American Development Bank, Manifest Energy