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Climate Fund Managers, the climate-focused blended finance investment manager, has announced the first close of SA-H2 Fund at $184.6 million (ZAR 3.0 billion). The fund aims to achieve its target of $738 million (ZAR 12 billion) by mid-2028.
The fund, also known as Climate Investor Three South Africa, 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 decarbonisation of hard-to-abate industries like steel, fertiliser, e-fuels, and chemicals.
The first close brought together a mix of public and private capital.
Commitments to the fund’s development tranche, which provides early-stage risk capital and technical assistance, came from Invest International, the European Commission via its Global Gateway strategy, and the Industrial Development Corporation of South Africa.
The equity tranches, which take projects from financial close to construction, saw commitments from South Africa’s Public Investment Corporation on behalf of the Government Employees Pension Fund, Sanlam Life Insurance, Invest International, and the European Commission. The Development Bank of Southern Africa also supports the fund.
SA-H2 uses a blended finance structure that deploys public capital strategically to balance risk, making it possible for institutional investors to participate in projects they might otherwise consider too early-stage or risky.
The fund combines a development tranche and equity tranches in a single platform, taking projects from preparation through to construction.
The first close is notable for its investor base, bringing together European development finance, South African pension capital through the PIC, domestic development finance through the IDC, and private institutional money through Sanlam Life.
Lucky Pane, Head of Research and Innovation at the PIC, said, “Our investment in the SA-H2 Fund is in line with the Hydrogen Investment Strategy that we adopted as far back as 2022. The investment in hydrogen gives the PIC the ability to assist its clients in diversifying their energy needs and meeting their net zero targets. This also assists the PIC in decarbonising its portfolio. Furthermore, the PIC supports the United Nations’ Sustainable Development Goals.”
“One of the key goals under SDG 7 is affordable and clean energy, which seeks to increase the proportion of renewable energy in the global energy mix. We believe that hydrogen can play a significant role in the realisation of that energy mix. This investment has been made possible by the Government Employees Pension Fund, which has given us the mandate to make investments that have a positive impact and contribute to long-term sustainability,” adds Pane.
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
Climate Fund Managers is an investment manager focused on climate finance in emerging markets, including Africa, Asia, and Latin America. They manage over $2.8 billion across more than 50 projects, investing in renewable energy, sustainable cities, and infrastructure.
Their funds include Climate Investor One, Two, Three, and the Shariah-compliant Malaysia Climate Infrastructure Fund, as well as the GAIA Climate Loan Fund for private credit.
Founded in 2015, they are a joint venture between the Dutch development bank FMO and Sanlam InfraWorks, with offices in The Hague, Cape Town, Singapore, and Bogotá.
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.”
European Commissioner for International Partnerships, Jozef Síkela, said, “This milestone sends a clear signal: Global Gateway is helping create the right conditions for private investors to enter fast-growing markets with high potential. In South Africa, it supports the transformation of the country’s renewable energy potential into lasting benefits for its citizens. Our cooperation with SA-H2 demonstrates this in practice. It supports job creation and industrial development in partner countries, while contributing to the decarbonisation of international industry.”
