• Climate Fund Managers has secured $182 million at the first close of SA-H2, targeting green hydrogen and industrial decarbonisation across Southern Africa.
• The blended finance structure combines European and South African public capital with institutional investment to reduce early-stage project risk.
• The fund will back green hydrogen, ammonia and methanol projects while targeting emissions cuts in steel, fertiliser, chemicals and e-fuels.

Climate Fund Managers has reached the first close of its SA-H2 Fund with approximately $182 million in commitments. The fund will invest across Southern Africa’s emerging green hydrogen economy.

Also known as Climate Investor Three South Africa, SA-H2 targets large-scale energy transition projects. Its mandate covers green hydrogen production and downstream products such as green ammonia and green methanol. It will also finance projects designed to cut emissions from hard-to-abate industries.

The first close brings together capital from European development institutions, South African pension assets and domestic financial institutions.

Blended finance targets early-stage project risk

SA-H2 uses a blended finance model to combine public and private capital within one investment platform.

Public funding is intended to absorb risks that may prevent institutional investors from entering projects at an early stage. The structure includes a Development Tranche, which provides risk capital and technical assistance before a final investment decision.

Separate blended Equity Tranches support projects from financial close through construction.

Invest International and the European Commission committed to the Development Tranche, alongside South Africa’s Industrial Development Corporation. European Commission funding is provided through its Global Gateway strategy.

The Equity Tranches attracted commitments 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.

Andrew Johnstone, CEO of Climate Fund Managers, said: “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.”

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Investors target Southern Africa’s hydrogen opportunity

Green hydrogen is attracting interest as governments and investors search for ways to decarbonise industries that cannot easily rely on direct electrification.

Steel, fertiliser, chemicals and e-fuels are among the sectors targeted by SA-H2. Southern Africa also has significant renewable energy resources that could support hydrogen production.

Jeroen Plag, CIO of Invest International, said: “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.”

European Commissioner for International Partnerships, Jozef Síkela, said: “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.”

Pension capital enters the transition

The participation of South Africa’s PIC brings large-scale pension capital into the fund. The investment follows the PIC’s Hydrogen Investment Strategy, adopted in 2022.

Lucky Pane, Head of Research and Innovation at the PIC, said: “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.”

For investors, SA-H2 provides a test of whether blended capital can move Southern African hydrogen projects from development into construction. Success could provide a financing model for other emerging markets where renewable resources are strong but early-stage infrastructure risks remain high.

For governments and corporate buyers, the stakes extend beyond clean energy. Competitive hydrogen production could support industrial development, exports and lower-carbon supply chains. That would give Southern Africa a larger role in the global transition of emissions-intensive industries.