The previous year of 2020 has certainly been a year of challenges, uncertainty, and partnerships. In 2020 FMO received a €40 million grant commitment to top-up the Access to Energy Fund (AEF), to be paid out over the period 2020-2024. The first tranche, €15 million, was received in December 2020.
For most AEF customers, 2020 was a difficult year due to COVID-19. On-grid energy projects under construction viewed delays, leading to cost overruns. The off-grid energy sector faced temporary difficulties in the supply of solar panels and other material, and a decline in demand. As a consequence, the value of AEF’s equity portfolio decreased, and provisions were taken on the loan portfolio.
In the interest of business continuity for three existing customers, AEF provided COVID-assistance to ensure the health and safety of employees and communities by providing personal protective equipment whilst raising awareness.
Under the banner of partnership, AEF joined FMO, MASSIF and Building Prospects fund to launch the FMO Ventures program that became operational in August 2020. The program, through funds, actively invests in eligible technology-enabled companies in any of it’s three focus sectors: Fintech, Energy Access, and AgriTech but also other relevant and impactful sectors such as Edutech, Healthtech, and Mobility.
We welcomed three new customers: AEF financed Fasobiogaz and Kodeni, Burkina Faso. The latter together with FMO, where AEF is taking a higher risk position. In India, AEF entered into a loan agreement with Dharma Life: a female-led enterprise selling solar lamps and cook stoves to rural households.
In two instances, Salima Malawi and Scatec Bangladesh, additional funding was provided to help customers facing delays.
As AEF is mandated to provide risk finance to projects, the fund actively seeks to exit customers of which the risk appetite meets commercial financiers or FMO. In 2020, together with Building Prospects, AEF transferred the Kivu Watt Rwanda loan to FMO. Moreover, AEF’s equity stake in Rabai Kenya, was sold to FMO.
For 2021 it is anticipated that COVID-19 will continue to have an impact on the portfolio and pipeline. Monitoring the existing customers, and helping them where needed, remains the key focus. At the same time AEF continues to look for new investment opportunities in high-risk markets and sectors.