SIZE MATTERS: GCPF > USD 500 M
In the field of investments, size matters. This is particularly true when a fund targets new terrain such as driving climate financing in emerging economies. The Global Climate Partnership Fund has recently crossed the USD 500 m threshold when it comes to committed capital to investees. We talked to Antoine Prédour, who heads the GCPF team at GCPF investment manager responsAbility Investments and asked him about the recipe behind this success.
“GCPF has gained entry into a whole new league.”
Antoine Prédour, Head of GCPF at responsAbility Investments
GCPF HAS JUST RELEASED ITS ANNUAL RESULTS FOR 2017. WHAT IS THE BIGGEST ACHIEVEMENT?
In the business year 2017, GCPF has grown by close to 50% to reach USD 503 million of committed capital to investees at year end. Since then, it has continued to grow and now stands at USD 520 million. This strong growth shows that GCPF is managing to convince both investors and investees of the potential of climate financing, both financially and impact-wise.
WHY IS IT SO IMPORTANT FOR A FUND LIKE GCPF TO REACH A CERTAIN SIZE?
In the world of investments, size matters. Owners of large private investment funds often only start considering investment opportunities once the total fund size exceeds USD 500 million. By crossing this threshold, GCPF has gained entry into a whole new league.
Last but not least, by increasing its size, the fund is achieving a larger impact. Recently, the fund also passed the symbolic threshold of 10 million t of expected lifetime CO2 reductions. To give you an example, this corresponds to the yearly carbon footprint of a country like Luxembourg. This is a major achievement.
MILESTONE: GCPF > USD 500 M
WHAT IS GCPF'S MAIN SUCCESS FACTOR IN SCALING UP CLIMATE FINANCING IN EMERGING ECONOMIES?
On one hand, GCPF is able to provide partner institutions with longer loan tenure than are commonly available in the markets. As energy loans typically require longer terms, this is one key factor.
On the other hand, GCPF puts a lot of effort and funding into support services for partner institutions. In 2017 alone, we initiated 44 new Technical Assistance projects designed to enable our partners to exploit the potential of energy loans in their respective markets. Also, GCPF has a team of in-house engineers whose only mission is to provide technical support to our partner institutions.
HOW HAS THE FUND'S SCOPE / OFFERING / APPROACH BROADENED ALONG WITH ITS VOLUME?
At the beginning we almost exclusively financed energy projects via financial institutions in our target markets. Today we are also directly funding a whole series of project owners or SMEs in the renewable energy space, thereby gaining a foothold in the areas of larger-scale energy generation or distributed energy.
WHAT ARE YOUR EXPECTATIONS FOR 2018?
We aim to grow the fund by USD 75 million to 100 million and to increase our support to partner institutions, while continuing to further broaden our network. In addition, we will host the second edition of the GCPF Academy, a peer learning event on green lending.