British International Investment (BII) and Alexforbes Investments have each committed R500m (€25m) to South Africa’s Revego Africa Energy Fund, marking one of the largest investments in the country’s nascent secondary market for renewable energy assets.

The R1bn total investment supports Revego’s acquisition of operational renewable energy projects from developers, creating liquidity that can be reinvested in new construction. The structure addresses a persistent challenge in emerging markets: developers often struggle to exit completed projects, limiting their capacity to build additional capacity.

“Funds like Revego create pathways for ownership to transition from developers to long-term investors,” said Chris Chijiutomi, managing director and head of Africa at BII, the UK’s development finance institution. The model enables developers to “recycle capital into new greenfield projects” rather than holding assets through their operational lifetime.

Building institutional appetite

The investment reflects efforts to establish renewable energy infrastructure as an investable asset class for South African pension funds and insurance companies, which have historically allocated limited capital to the sector.

Alexforbes, which manages investments for retirement funds and institutional clients, has deployed over R11bn in private markets over two decades. Gyongyi King, chief investment officer for private markets at Alexforbes, said the firm views renewable energy infrastructure as offering “infrastructure-linked, inflation-protected returns.”

The secondary market for operational renewable projects remains underdeveloped compared to primary investments in project construction. Institutional investors typically prefer assets with established operational track records and predictable cash flows, but few funds have focused on acquiring such projects in Sub-Saharan Africa.

Policy alignment

BII’s participation forms part of the UK’s support for South Africa’s Just Energy Transition Partnership, an international financing initiative announced in 2021. South Africa has committed to reducing coal dependence and adding significant renewable capacity by 2030.

The country has experienced electricity shortages for over a decade, with state utility Eskom implementing regular power cuts. The government has progressively removed restrictions on private renewable energy development, with generation licensing thresholds increased to 100MW in 2021 and eliminated entirely for projects connected to private networks in 2023.

This regulatory shift has accelerated project development, but developers have highlighted the need for exit pathways to sustain momentum. The Revego fund aims to provide such liquidity by purchasing operational assets.

Fund composition

Revego is majority black-owned and managed, according to the investors. BII noted the investment qualifies under its 2X Challenge criteria for investments benefiting women, though specific details of how the fund meets these standards were not disclosed.

Ziyaad Sarang, chief investment officer at Revego, said the fund targets projects with “strong early performance” and positions the strategy as suited to investors seeking exposure to climate infrastructure with demographic tailwinds.

The R1bn commitment represents the fund’s initial capital, with potential for expansion depending on deal flow and investor appetite. Neither BII nor Alexforbes disclosed target returns or the fund’s planned portfolio composition.

South Africa’s renewable energy sector has attracted increasing international capital, though investment volumes remain below government targets for meeting power demand and transition commitments. The secondary market investment model now receives attention as complementary to traditional project finance, though its scalability will depend on the pace of new project development and institutional investor allocation decisions.