LATAM ENERGY EFFICIENT HOUSING FUND III

Promoter – Financial Intermediary

ASHMORE INVESTMENT MANAGEMENT (IRELAND) LTD

Location

• Regional - Latin America

Description

Equity fund developing energy efficient social and affordable housing in Colombia and Peru.

Additionality and Impact

The Fund will invest in affordable housing and social infrastructure for vulnerable population of Colombia and Peru. All investments will receive an international energy efficiency certification (EDGE, Excellence in Design for Greater Efficiencies, developed by the International Finance Corporation).

 

By fostering energy efficient investments, the project addresses the issue of asymmetric information - a well-known market failure in the energy efficiency market as it fosters better investment decision, which will benefit the end user accessing the buildings by lowering their energy consumption or by improving their comfort. As the energy efficiency market is still incipient in these countries, the project will contribute to accelerate the market transition to the green economy. In addition, the project targets a segment with significant investment needs as housing deficits (quantitative and qualitative) in these countries are severe.

 

By ensuring higher energy efficiency levels, the project contributes to climate change mitigation and is fully aligned with the Bank's Energy Lending Policy and the Climate Bank Roadmap. The operation supports the objectives of both Colombia's and Peru's Nationally Determined Contributions (NDC).

 

The proposed operation will contribute towards the achievement of several SDGs (Sustainable Development Goals), namely SDG1 (end poverty), SDG 6 (Ensure availability and sustainable management of water and sanitation for all), SDG 7 (Ensure access to affordable, reliable, sustainable and modern energy for all), SDG 8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all), and SDG 11 (Make cities and human settlements inclusive, safe, resilient and sustainable). 

Objectives

The fund, which has a target size of USD 150m, will develop affordable housing and social infrastructure assets in the healthcare and education sectors in Colombia and Peru with a focus on energy efficiency.

Sector(s)

• Urban development - Construction

Proposed EIB finance (Approximate amount)

USD 25 million (EUR 21 million)

Total cost (Approximate amount)

USD 150 million (EUR 127 million)

Environmental aspects

The projects will bring a positive impact on the environment as they will be developed according to the EDGE (Excellence in Design for Greater Efficiencies) resource and energy efficient green housing standards. An innovation of the International Finance Corporation (IFC), a member of the World Bank Group, EDGE empowers emerging markets to scale up resource-efficient buildings in a fast, easy, and affordable way. EDGE enables developers and builders to quickly identify the most cost-effective ways to reduce energy use, water use and embodied energy in materials. The EIB will require that each investment meets all local and EIB environmental requirements and that the Promoter ensure through appropriate measures that all EIB Environmental and Social Standards (E&S) risks during construction and operation will be mitigated. Details will be reviewed during appraisal of the Promoter's environmental and social due diligence procedures for ensuring compliance with relevant EU and national regulation and the E&S, as well as the capacity of the Promoter to assess and monitor environmental and social risks and impacts.

Procurement

It is anticipated that most operations will be private investment operations subject to a private procurement regime in line with the EIB's Guide to Procurement. If operations were to finance state-sponsored entities, they would have to follow public procurement as set forth in the EIB guide to procurement.

Status

Signed - 25/07/2022