British International Investment invests R125 million into controversial H1 Holdings wind projects in South Africa

  • BII introduces its first CPI-linked tranche of mezzanine financing to back two wind projects in South Africa with a combined capacity of 280MW.
  • The investment reflects BII’s strong commitment to supporting energy transition in South Africa and builds on its long-term partnership with local developer H1 Capital. 
  • H1 Capital are controversially linked to tender rigging allegations in South Africa’s energy procurement programme, REIPPPP Bid Window 5, where they are named as black empowerment equity partner in no less than 21 of the 25 projects awarded preferred bidder status. Read more 
  • Of the 25 energy projects awarded in 2021, only eight have started construction. Read more

British International Investment plc (BII), the UK’s development finance institution (DFI) and impact investor, today announced a ZAR125 million investment in two wind farms in South Africa through its partnership with H1 Capital. BII is providing mezzanine financing split into two tranches – one linked to Consumer Prices Index (CPI) and one with a fixed rate – to enable H1 to fulfil its equity requirements for the projects.

BII’s investment will support development of two 140MW wind farms in the Northern and Eastern Cape of South Africa. The two projects are part of a three-project cluster co-developed by H1 Capital and EDF Renewables. They are currently under construction, expected to reach completion in 2024 to provide clean and affordable energy to South Africa’s people under 20-year power purchase agreements with national utility ESKOM.

Linking to the indicator of local inflation, the facility will offer a natural inflation hedge to H1 as the repayment is designed to match the power projects’ underlying cashflow, which is also linked to CPI, with the funding being provided.

Foreign currency exchange volatility and inflation have impacted macroeconomic conditions globally and in South Africa. As a counter-cyclical investor, BII is working with partners including H1 to create bespoke capital solutions across equity, debt and intermediary channels in order to facilitate capital flows and support economic growth.

Saad Ul Islam, Investment Director, Infrastructure Equity at BII commented, “We are delighted to deepen our partnership with H1 Capital and work creatively together on our latest commitment to two wind projects in South Africa. Supporting the country’s clean energy transition is one of BII’s key climate priorities.”

Author: Bryan Groenendaal

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