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The Board of Directors of the African Development Bank (AfDB) Group has approved an equity investment in a renewable energy fund run by Netherlands-based Climate Investor One (CIO), a blended finance and capital-recycling facility that is financing renewable energy infrastructure projects in emerging markets.

According to a statement released on Wednesday, AfDB will invest $32.5 million in CIO's Construction Equity Fund (CEF) to leverage additional financing from other sources to invest in renewable projects.    

CIO supports renewable energy projects through several stages of the projects’ life to ensure they get off the ground and attract new investors. Climate Fund Managers (CFM), a joint venture between the Netherlands Development Finance Company (FMO) and Sanlam InfraWorks, is the fund manager of CIO.

“Significant investments are required to close the infrastructure gap and meet energy access goals of Africa,” said Amadou Hott, Vice President for Power, Energy, Climate Change and Green Growth at the AfDB. “The Bank’s investment in the Fund will complement its operations in the energy sector, and unlock at least an additional $40 million of investments into Africa.”

With nearly 600 million Africans without access to energy, he added, there is a huge market for the CEF to invest and generate a return for its investors.

According to a statement released by the AfDB on Wednesday, the CIO aligns with one of the bank’s High Five Priorities, particularly the one to light up and power Africa. The investment is also consistent with the AfDB’s Climate Change Action Plan II, which supports infrastructure development and prioritizes the power sector and private sector development as well as the AfDB’s 10-year strategy for 2013-2022, including the transition to green growth.

The bank said the fund will have a measurable social and environmental impact as it supports the establishment of clean energy projects in developing markets, creates jobs and provides access to electricity.

“The Bank will be playing a key role as knowledge repository for Africa by enabling CFM to better gauge investment opportunities while ensuring the highest environmental and social standards are applied to the CEF’s projects,” said Wale Shonibare, AfDB’s Director of Energy Financial Solutions, Policy and Regulation.

CEF is one of the three funds run by CIO. It is a $500 million fund, which provides all equity financing for the construction phase of renewable energy projects. The other funds are the Development Fund ($30 million), which finances and provides technical assistance in the planning and development stages; and the Refinancing Fund, a $500 million fund providing long-term senior debt instruments to reduce operational project cost of capital and optimize funding structure.