Impact of DEG’s fund investments

Financing of small and medium-sized enterprises in the solar industry

Name: SIMA Commercial & Industrial Solar Green Bond B.V.
Invested volume (in EUR) as of 31.12.2023: 18.1 million

Region: Africa

Very often access to the grid is not available or not reliable in Africa. As a result, decentralized and cost-effective energy solutions such as photovoltaic systems are rapidly emerging as a viable source. However, the small and mid-sized companies in the C&I solar sector find it relatively difficult to gain access to finance for their business requirements.
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This is where SIMA Debt Fund comes in. It invests in the renewable energy infrastructure space across the African continent and targets small and mid-sized developers for solar projects of up to 5 MW. Furthermore, at least one-third of the financing volume shall flow into least developed countries/IDA eligible countries. This will promote independent (green) energy production at a reasonable cost and increase energy security in a region that is vulnerable to a volatile and expensive energy supply.

Private equity firm promotes climate strategy and greenhouse gas screening of its portfolio companies

Name: Mediterrania Capital III, L.P.
Invested volume (in EUR) as of 31.12.2023: 19.2 million

Region: Africa

Mediterrania Capital Partners (MCP) is a private equity firm that provides growth capital to medium-sized businesses in North Africa and French-speaking sub-Saharan Africa. Investments in small and medium-sized businesses are especially important for creating jobs, stimulating income, and growth.  

Since its establishment in 2013, MCP has set up several funds and is a long-standing partner of DEG. MCP provides ongoing assistance to its portfolio companies in terms of strategic direction, commercial development, corporate governance, and environmental and social management. DEG Impulse’s Business Support Services enabled the firm to develop a climate strategy and perform GHG screening for selected portfolio companies. This allows MCP to accompany its investee companies in adapting and mitigating their impact on climate change, as well as to identify the portfolio companies that provide the largest lever for mitigation efforts and/or are most vulnerable to climate change. Investments in small and medium-sized businesses are especially important for creating jobs, stimulating income, and growth.

Study: Development impact of debt funds

Debt funds are an important tool for DFIs seeking to make a sustainable development impact, as they help to reduce the investment risk in regions and sectors that are difficult to access, to mitigate risk through blended finance, and to enable investments in smaller project volumes.
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In partnership with the Development Bank of Austria (OeEB), DEG commissioned a study by Steward Redqueen in order to understand the approaches of debt fund managers in impact management and identify opportunities for more effective and efficient impact analysis of debt funds.
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Debt funds accounted for just 1% of the DEG portfolio in 2023; however, the aim is to increase this proportion significantly in future. The study made a series of recommendations to improve the impact assessment of investment in credit funds based on an analysis of development impacts previously measured by fund managers and a comparison with DEG scoring using DERa 1.0. The key recommendations were:

• to reduce the number of indicators consulted in order to increase the data quality for a base group of indicators,
• for the fund manager to aggregate data at fund level instead of at individual investee level, and
• to determine core indicators and supplementary indicators depending on the key issues.

Information on the design of the study and the recommended set of indicators is provided in the following summary.