• logo linkedin
  • logo email
By allocating a loan to a fund specialized in small-scale renewable energy and energy efficiency projects, MGM SUSTAINABLE ENERGY FUND II LP, PROPARCO is renewing its commitment in these two sectors.
Client presentation

MSEF II is a sector fund specialized in small-scale renewable energy (REN) and energy efficiency (EE) projects in Latin America. The manager is based in Miami and mainly operates in Colombia, Mexico and Brazil, where it has local offices, but also in Peru and Central America. 

Project description

MSEF II offers either a financing solution for off-balance sheet assets, or asset financing via subordinated debt. This theoretically self-liquidating structure is deployed for commercial clients (A/C systems, heating, etc., for hotels, shopping centers, real estate), industry (decentralized solar generation (DSG), heat recovery, etc.) and the municipal sector (urban street lighting). For its REN strategy, the II fund targets investments in small-scale generation projects (less than 20 MW) using photovoltaic energy, hydropower (run-of-river), biomass and biofuels. 

Project impact

Based on the performance of MSEF and the target size of MSEFII, the expected impacts are as follows: 

  • Support for some 790 indirect jobs, including some 150 held by women (jobs in the investee companies);
  • Development of an installed capacity of REN of 70.9 MW, allowing a power generation of some 121.8 GWh every year, i.e. the equivalent of the annual electricity consumption of 56,586 inhabitants in the ALC region; 
  • Support for the development of capital markets in geographical areas where access to capital for SMEs in the REN and EE sector remains limited;
  • Contribution to climate change mitigation efforts in the targeted geographical areas by reducing or avoiding GHGs. The fund estimates there is a potential to avoid/reduce emissions by some 108,000 tCO2eq a year thanks to the investments made by MSEFII and based on the performance of the predecessor fund.  
28/02/2020
Date of signature of the project
Multi-country Global Brazil Colombia Mexico Peru
Location
Financing tool
11 000 000 Euros
Amount of funding
USD 12m equity investment
Financing details
MGM SUSTAINABLE ENERGY FUND II, LP
Client
CES