STANLIB is launches the STANLIB Khanyisa Energy Transition Fund. The objective of the fund is to mobilise much needed capital from long-term investors to help finance South Africa’s energy transition needs, extending into the rest of the continent in future.
“The energy transition theme, which at its core is a disruptive technological revolution, will require significant capital but also presents an investment opportunity that will take many years to fully mobilise and fund. The STANLIB Khanyisa Energy Transition Fund is designed to provide easier access to mobilise capital to fund this transition and the opportunities this transition presents”, says Johan Marnewick, head of STANLIB’s Credit Alternatives and one of the Fund’s portfolio managers.
The Fund aims to support one of the central concerns of developing countries at COP 28, which is to secure adequate, predictable, at-scale and appropriate means of support for climate actions and just transitions. With R3 billion of renewable energy independent power producer programme (REIPPP) assets seeded from Standard Bank and Liberty, the Fund offers scale and diversity from the outset and is expected to grow into a $1 billion (R18.5 billion) fund over time.
The Fund’s target investors are retirement funds, life insurance companies and various other investors such as fixed income asset managers and development finance institutions (DFIs). It aims to deliver compelling risk-adjusted returns from a portfolio of credit instruments with exposure to initially South African and eventually other African entities. Those instruments will include investment-grade South African corporate debt, asset-backed finance, development and project finance.
“The Fund invests in credit assets, which offer predictable cash flows within lower risk parameters to meet the return objectives of investors. These energy transition assets are often not available on listed, more traditional markets and provide access to real economy business opportunities that have diversification benefits for investment portfolios,” Marnewick adds.
The Khanyisa Energy Transition Fund will target energy transition assets including renewable energy, decentralised energy, gas as a transition fuel, critical minerals, green hydrogen infrastructure, and the revolution in transport which refers to the whole eco-system needed to support the move to hybrid and electric vehicles.
The Fund is part of STANLIB’s Khanyisa Impact Investment Fund suite, which invests in various themes that contribute to fulfilling the United Nations SDGs, demonstrating STANLIB’s commitment to social and environmental impact.
The lead portfolio manager is Kholofelo Molewa, who manages the developmental and infrastructure strategies within STANLIB’s Credit Alternatives investment team. He has more than 15 years’ experience as both a debt and private equity financier, gained at prestigious financial institutions.
“We believe there is a significant appetite for assets such as this that are carefully selected and monitored by experienced managers with a long track record,” says Molewa.
STANLIB’s Credit Alternatives team is one of the largest and best-resourced credit teams in the African continent. With 29 professionals focused on a broad range of credit investment opportunities, it represents over 350 years of collective experience. The team manages R52 billion in assets and has originated transactions worth over R110 billion. This team also manages the STANLIB Khanyisa Impact Investment Fund and the Pan-Africa Debt Fund.
“Extracting value from this complex asset class requires a high degree of technical expertise, a rigorous investment process, and a focused approach to downside risk management – all of which form the bedrock upon which our asset portfolios are being managed,” Molewa concludes.
