South African investment management company Westbrooke Alternative Asset Management has successfully closed its R300-million inaugural tax-enhanced renewable energy alternatives investment strategy.

It plans to invest the capital alongside South African businesses that install, operate and own small and medium-sized embedded generation solar photovoltaic (PV) projects.

“The Westbrooke renewable energy alternatives (REAL) fund allows investors to access the much-needed and fast-growing renewable energy sector, through a diversified portfolio of solar PV projects underpinned by long-term cash flows, through power purchase agreements (PPAs) concluded with high-quality end-users,” says Westbrooke product development and distribution head Dino Zuccollo.

The objective of the Westbrooke REAL fund is to invest the capital in various solar PV energy projects, alongside reputable and experienced partners to unlock and accelerate the roll-out of these projects, says Westbrooke South African investment team head Jonti Osher.

The Westbrooke REAL fund will invest in renewable energy projects, including small- and medium-sized embedded generation projects which are either grid-tied or in a hybrid system, including batteries or generators. This will range from project sizes of 100 Kw up to 25 MW.

The fund will also invest in existing and greenfield solar projects, as well as projects that are underpinned by PPAs and/or operating leases with a focus on commercial, industrial, agricultural and body corporate off-takers.

Key to the strategy is to provide fast, innovative and flexible equity funding to its solar partners to roll out their pipeline.

“Partners will benefit from our collaborative approach and tailored investment solutions, with the ability to move with speed to provide accelerated growth and fast-track project execution,” says Osher.

The Westbrooke REAL fund will invest in projects that provide off-takers with certainty of electricity supply and cheaper electricity over the long term.

To incentivise investment, Finance Minister Enoch Godongwana has expanded the Section 12B tax incentive to enable investors to claim up to a 125% up-front tax deduction for all renewable energy projects brought into use for the first time between March 1, this year, and February 28, 2025.

The fund allows investors to benefit from owning the underlying solar PV projects and claim the 12B tax benefits. The innovative Westbrooke REAL investment structure allows investors to enhance 125% to between 200% and 250% of their cash invested, Zuccollo explains.

“After recouping their initial capital, investors will remain invested in a high-quality solar project that will deliver stable and predictable yields for up to 20 years. It’s attractive for investors seeking long-term returns with a capital preservation focus,” he says.

“The company achieved its target by raising from numerous private investors in eight weeks. Closing the 2024 fundraise in record time is a significant achievement.

“The demand for allocations in the fund is indicative of the attractive investment returns, and the desire of private investors to support solutions that can address the energy crisis in the country,” Osher adds.