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Design of Gigaton Empowerment Fund

Convergence awarded a proof-of-concept grant to Mirova SunFunder Inc for the design and launch of the Gigaton Empowerment Fund - a $500 million blended fund that will target investments in distributed energy and off grid projects in emerging markets, while applying a gender lens across several levels, including across the firm, investment lifecycle, investees, and in its supply chain.

Currently, over 750 million people globally have no access to electricity. This means that millions of families lack the foundation for social and economic development, remaining reliant on toxic and dangerous kerosene for lighting, while local businesses experience frequent power cuts and are unable to expand. Women are also disproportionately affected by poor access to electricity, as they often manage the day-to-day challenges of maintaining a household. As a result, many of the Fund’s impacts will directly benefit women.

The market for providing debt financing for energy access is still small and is primarily focused on just a few segments of the market. The Design Funding grant from Convergence will enable Mirova SunFunder to design a scalable blended finance vehicle with a strong gender-lens focus that will target both established and frontier segments in distributed energy/off-grid sub-sectors, such as commercial and industrial, telecom, solar home systems, agri-solar, mini-grids and e-mobility. Gigaton will target both middle-income countries and low-income and least developed countries where its impact would be most significant (e.g., Democratic Republic of the Congo, Malawi, Sierra Leone, Myanmar etc.).

The Fund will build on its track record in distributed solar investments in Sub-Saharan Africa. The team has experience managing multiple blended funds focused on off-grid solar in Sub-Saharan Africa to date. However, this financing has been on a small scale so far and the Gigaton Empowerment Fund is among the first attempts to tackle these challenges on a much larger scale. Besides the scale of the vehicle, the Fund will seek an investment grade credit rating within the scope of Convergence’s grant funding.

Design question and learning potential for the market: How can climate investments be scaled up for distributed clean energy transition in underserved markets while maintaining a gender-lens investing approach? During the proof-of-concept phase, the Mirova SunFunder team will be pursuing ambitious design activities such as obtaining a credit rating for the Gigaton Empowerment Fund. This is notable because there is no precedent for conducting a rating exercise for a blended debt fund and the team’s efforts will lay the groundwork for other blended debt funds also receiving credit ratings. A credit rating would also attract investments from institutional investors towards blended finance solutions in emerging markets.

Another significant activity in the proof-of-concept stage is the strengthening of the Fund’s gender-lens investing approach. The Mirova SunFunder team will be redesigning their gender investing strategy, processes, and methodologies to successfully qualify the Fund for all five criteria under the 2X Challenge and to position Gigaton as a leading gender-lens investing vehicle.

    In progress
    Year and Quarter
    Gender-Responsive Climate Finance Window, 2022, Cycle 1
    Design Activity
    Proof of Concept
    Region Focus
    Sector Focus