ARM-Harith raises $76m in first close of climate transition fund

ARM-Harith Infrastructure Investments Limited has secured approximately $76 million in the first close of a new climate transition fund designed to channel institutional capital into infrastructure projects across Sub-Saharan Africa.

The fund is targeting a final close of $200 million and is expected to invest in projects focused on energy transition, climate resilience and infrastructure capable of generating long-term economic value.

The initiative represents an effort to bring more African institutional investors, particularly pension funds, into infrastructure financing while also attracting international capital to the sector.

Fund combines local and foreign currency

A major feature of the new investment vehicle is its multi-currency structure.

ARM-Harith said the fund is designed to combine US dollar and local-currency investments within a single infrastructure equity platform.

The structure is intended to address one of the major challenges facing infrastructure investment in Africa: the mismatch between foreign-currency funding and revenues generated in local currencies.

By allowing both local and hard-currency capital to participate in the same investment structure, the fund is expected to reduce some currency-related risks at the project level while creating greater opportunities for domestic institutional investors.

The approach could be particularly relevant to pension funds, whose liabilities are generally denominated in local currencies.

$20m catalytic capital supports first close

The first close received $20 million in combined catalytic capital from FSD Africa Investments and the African Development Bank through its Sustainable Energy Fund for Africa.

The catalytic funding is expected to help reduce investment risks and encourage pension funds and other institutional investors to commit capital to infrastructure projects.

ARM-Harith said the structure is intended to unlock more domestic savings for infrastructure while allowing international investors to maintain exposure to dollar-denominated investments.

The broader objective is to create a financing model that can mobilise larger pools of long-term capital for projects across the continent.

ARM-Harith builds on previous infrastructure investments

The new fund builds on the experience of ARM-Harith’s predecessor fund, which invested in critical infrastructure projects across Africa.

According to the company, investments under the previous fund helped finance more than 700 megawatts of installed power generation capacity and major transport infrastructure projects.

The investments were also associated with the creation of approximately 22,500 jobs and an estimated avoidance of 2.6 million tonnes of carbon dioxide emissions annually.

ARM-Harith said the successor fund would build on this track record by targeting projects capable of delivering both commercial returns and measurable climate and development outcomes.

Energy and infrastructure among target sectors

The fund is expected to focus on essential infrastructure spanning areas such as energy, transport and logistics, digital infrastructure, waste management and water.

A key priority will be projects that can improve economic resilience while contributing to the transition towards cleaner and more sustainable energy systems.

This comes at a time when African countries face significant infrastructure financing gaps, particularly in electricity, transport, digital connectivity and climate-resilient infrastructure.

ARM-Harith believes institutional investors can play a larger role in closing that gap if investment products are structured around their long-term liabilities, risk requirements and currency considerations.

CEO highlights new investment model

ARM-Harith Chief Executive Officer, Rachel More-Oshodi, described the first close as an important milestone for the investment firm and African infrastructure financing.

She said the company’s first fund demonstrated that domestic institutional capital could be mobilised into infrastructure equity, while the new fund is designed to take that model further by combining local and international capital.

More-Oshodi said the structure would better align investment capital with the realities of African infrastructure assets and create a model that can attract additional investors as the fund moves towards its $200 million target.

AfDB sees opportunity to unlock private capital

The African Development Bank said the fund’s first close represents an important development for renewable energy and sustainable infrastructure investment in Sub-Saharan Africa.

Joao Duarte Cunha, Manager of the AfDB’s Renewable Energy Funds Division, said the bank’s participation through SEFA demonstrates its commitment to using catalytic capital to unlock longer-term institutional investment.

The objective is to use relatively limited public or development finance to attract significantly larger amounts of private capital into infrastructure projects.

Pension funds seen as critical source of capital

The fund’s structure is also designed to address some of the barriers that have historically limited pension fund participation in infrastructure equity.

Anne-Marie Chidzero, Chief Investment Officer at FSD Africa Investments, said the challenge was not necessarily a shortage of capital but the lack of investment products appropriately structured around pension funds’ needs.

She said the new model seeks to address issues including investment tenure, risk allocation and currency alignment.

Greater participation by pension funds could provide infrastructure developers with access to longer-term domestic capital while giving pension funds opportunities to invest in assets capable of generating long-term returns.

Implications for Africa’s infrastructure financing

The $76 million first close is relatively small compared with Africa’s overall infrastructure financing needs, but the structure of the fund could be more significant than the amount raised.

By combining domestic and international capital within one vehicle, ARM-Harith is seeking to create a scalable model for financing infrastructure projects while reducing some of the currency and risk barriers that discourage institutional investors.

The fund still needs to reach its $200 million final target, meaning further fundraising will be required.

If successful, the vehicle could provide additional capital for energy transition and climate-resilient infrastructure while demonstrating how African pension funds and other institutional investors can become more deeply involved in financing the continent’s long-term development.

For ARM-Harith, the first close marks the beginning of the next stage of its strategy to mobilise institutional capital into infrastructure and sustainable investment opportunities across Sub-Saharan Africa.