The Frontier Facility (formerly known as Project Development and Risk Mitigation facility) is managed as a separate facility and has a specific mandate set out by the MFA.
The facility serves two purposes:
- Enabling early phase project development within Norfund’s investment areas
- Risk mitigation for commercial investors that wish to invest in Norfund funded projects, throughout the project cycle
The Frontier Facility is primarily used for projects that have a risk level which is higher than other investments in Norfund’s core portfolio and to be used in our most demanding markets – in particular fragile states and Least Developed Countries (LDCs). These projects are therefore managed as a separate facility and are not included in Norfund’s overall portfolio valuation.
In 2022, we approved two new projects, of which one was committed. In addition, Norfund successfully converted one of its Frontier investments into equity (see below). To optimize the Frontier mandate, we developed a new strategy for the facility, indicating our ambition to use this funding for fragile states and project development within Green Infrastructure.
Through the facility we committed to an investment in a pilot fund, the Katapult Africa Seed Fund. This fund is expected to fund and assist African start-ups within agri-tech and climate-tech.
For a more comprehensive overview of the facility and active portfolio please refer to the Norfund website.
Empower
Empower was established in 2017 with a strategy to provide equity financing for smaller 1-10 MW clean energy projects across sub-Saharan Africa. Such projects (below 10 MW) have historically been too small for international developers and providers of non-resource project finance.
Empower closed its first funding round in September 2019, with EDFI MC’s ElectriFi as a cornerstone investor together with Norfund though the Frontier Facility. Other investors consist of Norwegian/European corporate and private investors.
This seed capital from Frontier was used to demonstrate Empower’s business and financial concept, aiming to finance the underlying pipeline of renewable energy projects.
Norfund has been an active investor during this initial phase – with participation in the investment committee and Board through an external representative as well as a shareholder.
In 2022, Norfund continued its support to Empower as it closed its second funding round. This follow-on investment meant a first successful exit through the Frontier Facility.