The Futuregrowth Power Debt Composite, an investment portfolio specialising in energy-related industries and sectors, forms part of Futuregrowth’s suite of developmental investments.
The benchmark is the South African STeFI Composite Index.
The Composite aims to outperform the STeFI by 2.25% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.
The Composite is largely invested/committed to invest in renewable energy deals that form part of the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). These include investments in solar photovoltaic (PV), concentrated solar power (CSP) and wind farms. Projects approved so far are located in the Northern Cape, Eastern Cape and Limpopo Provinces. All projects under the REIPPPP enter into an off-take purchase agreement with Eskom for power they will produce during the next twenty years and these revenue streams will be used by the projects to repay the debt finance.
This Composite has fairly high risk and concentration limits and good yield enhancement, and is not intended to be highly liquid given that the underlying transactions are unlisted, unrated and have relatively few co-creditors. The Composite will maintain only a small holding of liquid assets to facilitate transactions and/or client cashflow needs.
The Composite aims to provide investors with a vehicle that facilitates infrastructural, social, environmental and economic development in southern Africa through investments in energy related businesses and sectors. These include electricity generation from renewable, alternative and traditional sources, power distribution and reticulation, and supporting industries and sectors). The Composite delivers on a variety of social impact requirements such as:
- Job creation
- Employing local labour to build and maintain the plants.
- Short- and long-term job creation.
- SMME development through employing contractors.
- High level of mentorship and skills transfer from international developers.
- Local technology and subcontractors which will be used in all projects according to Government’s minimum requirements.
- International developers partnering with local firms that have a strong knowledge of the South African market.
- BEE equity requirements - including participation by a trust representing the local community which will be implemented according to minimums set by Government.
- Investment by the projects into local socio-economic infrastructure and services.
- Compliance with the Equator Principles.
- Funding clean energy with inflation-linked debt / view
- IRP 2010 energy strategy must be revised / view
- Investment in renewable energy ideal for pension funds / view
- Tracking the performance of Futuregrowth's Power Debt Composite portfolio / view
- Renewable projects helped reduce load shedding, created jobs / view