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CAREC, a New Clean Energy Investment Fund in Central America, is Open for BusinessWashington, DC, USA and San Jose, Costa Rica, August 1, 2006:A new investment vehicle is ready to provide innovative mezzanine and debt financing to clean energy enterprises in Central America. The Central American Renewable Energy and Cleaner Production Facility (CAREC) signed the partners’ agreement to fund US$17 million of a total targeted capitalization of US$20 million. CAREC, managed by E+Co Capital Ltd., a subsidiary of E+Co, Inc., was initiated with core financial and institutional support from the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB). CAREC will invest in renewable energy, energy efficiency and cleaner production projects in Central America. The focus will be on small and medium-sized enterprises, with annual revenues of up to US$5 million and less than 100 employees. The Facility is structured to utilize mezzanine-financing mechanisms such as subordinated debt, convertible debt, preferred shares and other quasi-equity instruments. Since renewable energy and energy efficiency provide ideal vehicles for reducing carbon emissions, CAREC will also seek to include opportunities for selling carbon emission reduction credits. This additional revenue stream is expected to add to the potential return on many clean energy deals. In addition to MIF, CAREC’s investors include the Central American Bank for Economic Integration (CABEI), The Belgian Investment Company for Developing Countries (BIO), Triodos Renewable Energy for Development Fund (TREDF) and the Finnish Fund for Industrial Cooperation, Ltd. (Finnfund). Also, with grant funding from MIF and the Netherlands Development Finance Company (FMO) the fund will have a Technical Assistance facility. “The continued increases in fossil fuel prices are creating more and more demand for cleaner forms of energy and energy efficiency. However, potential cleaner energy projects face difficulties in gaining access to needed financing. CAREC was created to help fill this financing gap within the Central America region and its specific focus on mezzanine financing instruments is intended to provide the appropriate financial vehicle to clean energy entrepreneurs”, said Daniel Shepherd, lead investment officer for CAREC from the MIF. Fernando Alvarado, CEO of E+Co Capital Latin America, the fund manager, said, “CAREC will fill an important financing gap in the Central American clean energy SME sector. By investing via mezzanine instruments such as preferred shares or subordinated debt, entrepreneurs will be able to strengthen their projects’ financial structures and successfully leverage the always-needed senior debt component. In this sense, CAREC should be viewed by commercial and development banks, both local and international, as a key source of flexible capital to facilitate their participation in the energy sector. Entrepreneurs should consider CAREC as a financier who, in addition to providing quasi-equity to turn their projects more bankable, could also play the role of a strategic investor.” E+Co Capital Latin America has secured a loan guarantee facility from USAID Development Credit Authority (DCA) to be used in support of private sector debt to the CAREC fund. About E+CoE+Co is the leading provider of services and capital to modern energy enterprises in developing countries. Organized as a not-for-profit, public purpose investment company, E+Co has offices in Bolivia, Brazil, China, Costa Rica, Ghana, the Netherlands, South Africa, Thailand and the United States. For additional information on E+Co contact:Fernando Alvarado |
