Seed Capital Assistance Facility (SCAF)
The Seed Capital Assistance Facility (SCAF) is a multi-donor trust fund managed by UNEP and backed by the German Federal Environment Ministry together with the British Department for International Development (DFID). It makes finance available during the development phase of projects being carried out in developing countries and emerging economies that are aimed at promoting the use of climate-friendly technologies (e.g. renewable energies, energy efficiency). The objective of these activities is to stimulate private investment. The assistance available ranges from financial support with feasibility studies and business plans in the pre-investment phase to co-financing of authorization procedures and technical and legal due diligence checks in the late phase of project development. This approach enables the financial barriers typically associated with the project development phase to be overcome. Currently, the geographical focus is on Asia and Africa.
SCAF’s vision is to increase the availability of investment for early-stage development of low-carbon projects in developing countries, contributing to low-carbon sustainable development, economic growth, poverty reduction and climate change mitigation. SCAF addresses this financing gap by providing financial support on a cost-sharing and co-financing basis to low-carbon projects via private equity (PE) funds, venture capital (VC) funds and project development companies (DevCos). After a successful initial Phase I, Phase II started in 2014 and will run until 2026, supported by contributions from the UK Department for International Development and the German BMU.
- Engage: Any party may express an interest in obtaining support at any point throughout the operational phase of SCAF. Interested entities are invited to submit a proposal once the Agent has conducted a preliminary check of the eligibility for SCAF II support. Additional guidance for project proposals can be found on the SCAF website. There are no specific deadlines or cut-off dates other than when the available budgets are fully committed. Once an approval in principle has been issued, the potential SCAF partner proceeds to the due-diligence stage.
- Due Diligence: Upon approval of submitted proposals, each interested potential partner has to undergo the SCAF II due diligence procedure as a condition precedent for formal contractual engagement. For the due diligence, the SCAF partner will follow a standardized process, similar to the one adopted by DFIs. After final approval, the SCAF Agent will start contract negotiations.
- Report on Progress: Once contracted, the SCAF partners have to report on their progress through the following means:
- Quarterly progress reports with financial information
- Regular conference calls with the management of SCAF partners
- Annual meetings which serve as a platform for the exchange of experiences
- Audited financial statements and confirmation letter for SCAF-financed expenses from auditor
There are three support line under Phase II:
- SL 0 is a conditional grant of between USD 200,000 and USD 500,000 that is paid back once the fund reaches a first close.
- SL 1 provides support in conjunction with SL 2 for a total amount of between USD 2 million and USD 2.5 million per partner.