Climate-focused blended finance investment manager Climate Fund Managers announced that it has raised ZAR 3 billion (USD$182 million) at the first close of SA-H2, a blended finance fund focused on supporting the development construction and operation of green-hydrogen infrastructure in Southern Africa.
The firm said that it is targeting a final close of ZAR 12 billion ($728 million) by mid-2028 for the new fund.
Launched in 2015 as a joint venture between Dutch development bank FMO and South African Sanlam InfraWorks, Climate Fund Managers specializes in blended finance in emerging markets across Africa, Asia and Latin America. The firm combines public and development finance with private capital, with the public capital helping reduce investment risk.
The new fund invests in large-scale energy transition projects across the green hydrogen value chain, including green hydrogen production, downstream derivatives such as green ammonia and green methanol, and the decarbonization of hard-to-abate industries.
According to the firm, the fund combines public and private capital in a single platform, with public capital deployed strategically to balance risk and enable institutional capital to participate. The fund comprises a Development Tranche, providing early-stage risk capital and technical assistance to prepare projects for final investment decision (FID), alongside blended Equity Tranches supporting projects from financial close through construction.
To date, SA-H2 has signed development funding agreements with Green Efuels Producers, a first-of-its-kind wastewater-to-green-methanol plant in South Africa’s Gauteng Province, and the Hive Hydrogen Coega Green Ammonia Project, South Africa’s first large-scale green ammonia production plant, the firm said.
Climate Fund Managers said that the first close reflects growing investor confidence in green hydrogen and its derivatives as a solution for decarbonizing hard-to-abate sectors, including steel, fertilizer, e-fuels and chemicals.
Andrew Johnstone, CEO of Climate Fund Managers, said:
“As the energy transition progresses, industrial decarbonisation requires solutions beyond electrification, and green hydrogen has a critical role to play. With Climate Investor Three, we are developing and scaling projects that enable industrial users to transition to low-carbon alternatives. This first close reflects confidence in Climate Fund Managers’ blended finance model and our track record of developing and scaling infrastructure projects in emerging markets into institutional-grade assets.”
The fund’s Development Tranche secured commitments from anchor investors Invest International and the European Commission via its Global Gateway strategy, alongside the Industrial Development Corporation of South Africa (IDC). The fund’s Equity Tranches included participation from South Africa’s state-owned asset manager, the Public Investment Corporation (PIC) on behalf of the Government Employees Pension Fund (GEPF), South African financial services company Sanlam Life Insurance Limited (Sanlam Life), Invest International and the European Commission. The fund was also supported by the Development Bank of Southern Africa (DBSA).
Mphokolo Makara, CEO of SA-H2 Fund Managers, said:
“South Africa’s combination of world-class renewable resources, a strong industrial base and growing demand for low-carbon fuels positions it to play a leading role in the emerging green hydrogen economy. Through SA-H2, we are developing a pipeline of commercially viable projects that will help decarbonise industry, drive long-term economic growth and support a Just Energy Transition.”
