British International Investment
29 November 2023

British International Investment expands capital solution offering in support of wind power generation in South Africa

  • BII introduces its first CPI-linked tranche of mezzanine financing to back two wind projects in South Africa with a combined capacity of 280MW.
  • The investment reflects BII’s strong commitment to supporting energy transition in South Africa and builds on its long-term partnership with local developer H1 Capital

British International Investment plc (BII), the UK’s development finance institution (DFI) and impact investor, today announced a ZAR125 million investment in two wind farms in South Africa through its partnership with H1 Capital. BII is providing mezzanine financing split into two tranches – one linked to Consumer Prices Index (CPI) and one with a fixed rate – to enable H1 to fulfil its equity requirements for the projects.

BII’s investment will support development of two 140MW wind farms in the Northern and Eastern Cape of South Africa. The two projects are part of a three-project cluster co-developed by H1 Capital and EDF Renewables. They are currently under construction, expected to reach completion in 2024 to provide clean and affordable energy to South Africa’s people under 20-year power purchase agreements with national utility ESKOM.

This is the first CPI-linked product offered by BII, marking an expanded offering from the DFI’s already wide range of capital solutions. This builds on BII’s expertise in structuring a financing product flexibly to meet the needs of the business. Linking to the indicator of local inflation, the facility will offer a natural inflation hedge to H1 as the repayment is designed to match the power projects’ underlying cashflow, which is also linked to CPI, with the funding being provided.

Foreign currency exchange volatility and inflation have impacted macroeconomic conditions globally and in South Africa. As a counter-cyclical investor, BII is working with partners including H1 to create bespoke capital solutions across equity, debt and intermediary channels in order to facilitate capital flows and support economic growth.

Saad Ul Islam, Investment Director, Infrastructure Equity at BII commented, “We are delighted to deepen our partnership with H1 Capital and work creatively together on our latest commitment to two wind projects in South Africa. Supporting the country’s clean energy transition is one of BII’s key climate priorities.”

Our capital offering to H1 is bespoke and tailored to the project’s specific needs; this is a key pillar of BII’s patient capital offering to investees. We understand the importance of flexible capital solutions, ensuring we meet the financing needs of our investees. We look forward to our continued work with H1 Capital.”

The investment contributes to United Nations’ Sustainable Development Goals on Affordable and Clean Energy (SDG7) and Climate Action (SDG13).

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