Climate Fund Managers has reached a ZAR 3 billion (approximately $182 million) first close for the SA-H2 Fund, a blended-finance private equity vehicle targeting large-scale green hydrogen and energy transition projects across Southern Africa.
Also known as Climate Investor Three South Africa, SA-H2 is designed to invest across the green hydrogen value chain, including green hydrogen production, green ammonia, green methanol, and projects that can help decarbonize hard-to-abate industrial sectors.
Climate Fund Managers is targeting a final fund size of ZAR 12 billion by mid-2028, meaning the first close represents roughly one-quarter of its ultimate fundraising objective.
The fund combines public and private capital within a layered structure intended to make emerging-market energy projects more investable for institutional investors.
Its Development Tranche provides early-stage risk capital and technical assistance to move projects toward final investment decisions, while blended Equity Tranches provide capital from financial close through construction.
Commitments to the Development Tranche came from Invest International, the European Commission through its Global Gateway strategy and South Africa’s Industrial Development Corporation.
Equity commitments were secured from the Public Investment Corporation on behalf of the Government Employees Pension Fund, Sanlam Life, Invest International and the European Commission. The Development Bank of Southern Africa is also supporting the fund.
The structure is intended to use public capital strategically to absorb or mitigate portions of project-development risk, helping attract larger pools of private institutional capital into projects that might otherwise struggle to secure financing.
Climate Fund Managers sees green hydrogen becoming increasingly important for industries where direct electrification alone may not provide a practical pathway to substantial emissions reductions.
Potential applications include steel, fertilizer, chemicals and e-fuels, sectors where hydrogen and its derivatives can potentially replace higher-carbon fuels and feedstocks.
SA-H2 has already begun establishing a project pipeline.
The fund has signed development funding agreements with Green Efuels Producers for a wastewater-to-green-methanol plant in South Africa’s Gauteng Province and with the Hive Hydrogen Coega Green Ammonia Project, which is being developed as South Africa’s first large-scale green ammonia production facility.
Those projects illustrate the broader strategy of supporting infrastructure that links renewable electricity generation with new industrial fuels and feedstocks.
The fund’s focus also positions it around South Africa’s substantial renewable energy resources and existing industrial base.
Climate Fund Managers believes that combination could allow the country to develop a meaningful position in the emerging global market for low-carbon hydrogen, ammonia and methanol while supporting domestic industrial decarbonization.
The SA-H2 strategy builds on Climate Fund Managers’ existing Climate Investor funds.
Climate Investor One and Climate Investor Two have together mobilized more than $2 billion for renewable energy, water, waste and oceans infrastructure projects across emerging markets.
Climate Fund Managers has also expanded into private credit through the GAIA Climate Loan Fund, which reached its first close in 2025 and is targeting a $1.48 billion final close in 2027.
The manager currently has more than $2.8 billion in assets under management and over 50 active projects across Africa, Asia and Latin America.
Its investment strategies span renewable energy, energy transition and green hydrogen, water, waste and maritime infrastructure, sustainable cities and the built environment.
Climate Fund Managers was established in 2015 as a joint venture between Dutch development bank FMO and Sanlam InfraWorks of South Africa’s Sanlam Group.
The ZAR 3 billion first close now gives SA-H2 capital to demonstrate commercial progress across its initial green hydrogen projects while Climate Fund Managers continues fundraising toward the ZAR 12 billion target.
KEY QUOTES:
“As the energy transition progresses, industrial decarbonisation requires solutions beyond electrification, and green hydrogen has a critical role to play. With Climate Investor Three, we are developing and scaling projects that enable industrial users to transition to low-carbon alternatives. This first close reflects confidence in Climate Fund Managers’ blended finance model and our track record of developing and scaling infrastructure projects in emerging markets into institutional-grade assets.”
Andrew Johnstone, CEO of Climate Fund Managers
“Reaching first close of the SA-H2 Fund is a strong signal of investor confidence in the green hydrogen opportunity in Southern Africa. At Invest International, we strongly believe that unlocking this opportunity requires close collaboration between the public and private sectors. Through this layered capital structure, we can deploy capital more effectively, de-risk early-stage development and help mobilise institutional investment at scale, supporting investment-ready projects and long-term value creation in the energy transition.”
Jeroen Plag, CIO of Invest International
“This milestone sends a clear signal: Global Gateway is helping create the right conditions for private investors to enter fast-growing markets with high potential. In South Africa, it supports the transformation of the country’s renewable energy potential into lasting benefits for its citizens. Our cooperation with SA-H2 demonstrates this in practice. It supports job creation and industrial development in partner countries, while contributing to the decarbonisation of international industry.”
Jozef Síkela, European Commissioner for International Partnerships
“Our investment in the SA-H2 Fund is in line with the Hydrogen Investment Strategy that we adopted as far back as 2022. The investment in hydrogen gives the PIC the ability to assist its clients in diversifying their energy needs and meeting their net zero targets. This also assists the PIC in decarbonising its portfolio.”
“Furthermore, the PIC supports the United Nations’ Sustainable Development Goals. One of the key goals under SDG 7 is affordable and clean energy, which seeks to increase the proportion of renewable energy in the global energy mix. We believe that hydrogen can play a significant role in the realisation of that energy mix. This investment has been made possible by the Government Employees Pension Fund, who have given us the mandate to make investments that have positive impact and contribute to long term sustainability.”
Lucky Pane, Head of Research and Innovation at the Public Investment Corporation
“As a shareholder in Climate Fund Managers, Sanlam has been a committed partner in driving climate finance solutions across emerging markets. Having invested in both Climate Investor One and Climate Investor Two, we are proud to continue this successful collaboration with Sanlam Life as an anchor Tier 2 investor in Climate Investor Three via the SA-H2 Fund.”
“This flagship vehicle will accelerate the development of green hydrogen projects that are essential for the decarbonisation of South Africa’s industrial sector, supporting a just energy transition, sustainable economic growth, and long-term value creation for our stakeholders and the country.”
Mlondolozi Mahlangeni, Chief Actuary & Chief Risk Officer of Sanlam Group
“This key milestone, reaching first close at ZAR 3 billion demonstrates the confidence that key partners as well as stakeholders have in the SA-H2 Fund. For us as the IDC, this development will augment our commitment to invest in large-scale energy transition projects spread across the green hydrogen value chain, including green hydrogen production, downstream derivatives such as green ammonia and green methanol, and the decarbonisation of hard-to-abate industries.”
“This also aligns with our strategic focus on building industrial capacity in emerging sectors, advancing localisation, and unlocking South Africa’s potential to compete globally in the clean energy economy.”
Rian Coetzee, Divisional Executive, Industry Planning and Project Development at the Industrial Development Corporation
“DBSA is committed to investing in creating a green hydrogen economy through funding the development of infrastructure in the green hydrogen value chain through various funding instruments. This is a reflection of DBSA’s mission to advance a just energy transition by unlocking infrastructure that enables sustainable and inclusive growth.”
“SA-H2’s blended finance model allows raising of capital in a way that catalyses private sector investment at scale. This is a strategic approach to drive development in a critical new sector while supporting South Africa’s long-term infrastructure goals.”
Greg Fyfe, Chief Investment Officer at the Development Bank of Southern Africa
“South Africa’s combination of world-class renewable resources, a strong industrial base and growing demand for low-carbon fuels positions it to play a leading role in the emerging green hydrogen economy. Through SA-H2, we are developing a pipeline of commercially viable projects that will help decarbonise industry, drive long-term economic growth and support a Just Energy Transition.”
Mphokolo Makara, CEO of SA-H2 Fund Managers