The commitment is to raise .0m to invest debt and equity in financially sustainable and scalable renewable energy companies whose target market is the base of the pyramid (USD 4 or less), with return of capital to Acumen Fund. Within 18 months, the energy portfolio will include 5 to 7 growth capital investments of ,000 to ,000 in social enterprises in South Asia. Over time, and based on the success of this commitment, Acumen Fund plans to raise an additional million from philanthropic capital and the capital markets to invest debt and equity in sustainable energy enterprises. The energy investments will also, from the outset, seek to tap into the carbon offset market, using Clean Development Mechanism and non-CDM carbon monetization mechanisms as a source of value.
Acumen Fund's portfolio team has conducted due diligence on a range of investment opportunities that lie at the intersection of energy and its work in health, water, and housing. The Fund's understanding of these investment opportunities, combined with analysis like the World Bank's review of infrastructure and development projects, point to the fact that affordable clean energy is not only a driver of direct economic development, but is closely linked with prevention of health problems, access to health care, availability of clean water, and the quality of low-income housing. The impetus to explore an Acumen Fund energy portfolio is therefore driven by several factors:
- Clean energy is consistent with Acumen Fund's mandate to finance market-based solutions to deliver critical goods and services to the poor. There is a clear correlation between the availability of formal energy services and increased per capita income at the base of the pyramid. Evidence shows that a shift from informal to more formal energy supplies, and relatively small changes in per capita energy use, can lead to significant economic gains and improvements in quality of life. Formalizing the energy services at the BOP using renewable technologies and market-based solutions for production of energy and delivery can lead to net reductions in carbon emissions while enabling critical economic development.
- The world's poor are likely to be the most highly impacted by global climate change. The scientific consensus about global climate change points to the poor in developing nations as the most vulnerable. Even marginal changes in temperature and rainfall patterns can have devastating effects among those living on the margin, especially the base of the pyramid-who are less able to respond to natural disasters, changes in crop resilience or soil fertility, and health hazards.
- There is a pipeline of clean energy enterprises consistent with its investment criteria in South Asia in need of capital. The type of investment opportunities that the portfolio team has seen in energy-strong entrepreneurs, proven technology innovations, viable business models, and the need for patient capital to take the innovations to scale-are very consistent with the patterns that we are seeing in the Fund's other portfolio areas and are well suited to Acumen Fund's catalytic role in financing social enterprises.
SEEKING: financial resources, implementing partners. Acumen Fund is seeking funding from individuals and institutions who are committed to finding ways to provide clean, affordable energy to the poor in India, Pakistan and East Africa.