About

Our
vision

SCAF’s vision is to increase the availability of investment for early-stage development of low-carbon projects in developing countries, contributing to low-carbon sustainable development, economic growth, poverty reduction and climate change mitigation.

Why seed capital
is important

Numerous barriers inhibit private sector financing of low-carbon projects in developing countries. During the early stage of development, projects carry a significant risk that is reduced only once all permits have been secured and legal, operational and financial viability has been demonstrated. Although the investment requirements are modest at this stage, third-party financing usually is not available, leaving the financial burden to the project developers who themselves are often poorly capitalised and unable to fully develop projects on their own.

For more information on the importance of seed capital see the background study "Catalysing Early Stage Investment”.

What SCAF
offers

SCAF addresses this financing gap by providing financial support on a cost-sharing and co-financing basis to low-carbon projects via private equity (PE) funds, venture capital (VC) funds and project development companies (DevCos). After a successful initial Phase I, SCAF launched Phase II in 2014.

SCAF's three support
lines under Phase II

The Facility consists of three different support lines, each of which addresses specific barriers:

Support Line 0

FUND DEVELOPMENT

SL 0 helps new fund managers in the low-carbon space during the fundraising stage.

Support Line 1

PIPELINE DEVELOPMENT

SL 1 supports PE/VC funds and DevCos in building a project pipeline while at the same time delivering capacity-building at the local developer level.

Support Line 2

PROJECT DEVELOPMENT

SL 2 co-finances, with PE/VC funds and DevCos, the development costs of getting seeded projects to full financial close.
SL 0 is a conditional grant of between USD 200,000 and USD 500,000 that is paid back once the fund reaches a first close. SL 1 provides support in conjunction with SL 2 for a total amount of between USD 2 million and USD 2.5 million per partner. SL 1 is a non-reimbursable grant and accounts for 30% of the total contract volume. SL 2 accounts for 70% of the total contract volume and is a conditional grant that is reimbursable for projects that reach financial close.
Activities typically financed under SL 0 include:
  • Fundraising costs (e.g., travel expenses)
  • Legal set-up fees
Activities typically financed under SL 1 include:
  • Training, coaching and workshops for local project developers
  • Project identification (e.g., event participation, travel expenses)
  • Pre-investment feasibility studies
Activities typically financed under SL 2 include:
  • Independent technical and project assessments
  • Feasibility studies
  • Financial risk analysis and project valuation
  • Regulatory compliance and framework reviews
  • Environmental, social and governance (ESG) risk analysis
Phase II of SCAF started in 2014 and will run for eight years with support provided by the UK Department for International Development and the International Climate Initiative of the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety. The Facility seeks eligible partners active in low and lower-middle income countries of Africa and Asia. Additional geographies may become eligible over time.

Phase II has been designed and structured based on an independent evaluation of Phase I of SCAF. Incorporating findings from the evaluation, three main changes were made to the Facility:

Support Line 0: A new support line, termed SL 0, has been established to help new fund managers fundraise for and establish new low-carbon private equity or venture capital funds.

Project development companies: In addition to private equity and venture capital funds, SCAF also can now partner with certain types of project development companies.

Support Line 2: The amount of SL 2 support per project has been increased to have greater impact, although it is now refundable for projects that achieve full financial close. This “evergreen” approach allows successfully deployed SCAF resources to re-flow and to be used for other projects.

During its implementation, SCAF has been supported by various multilateral institutions. In Phase I, the Asian Development Bank (ADB) was responsible for project implementation in Asia and the African Development Bank (AfDB) acted as partner institution for the Africa window. In Phase II, the following institutions have been actively involved in SCAF activities: AfDB, ADB, CDC Group plc, DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH, European Investment Bank and International Finance Corporation have delegated staff to act as advisors to the program.

For additional information, please consult the SCAF Brochure and/or the SCAF Flyer: