Climate Fund Managers has locked in the first close of the SA-H2 Fund, also known as Climate Investor Three South Africa, securing ZAR 3.0 billion, roughly $182 million in commitments to bankroll one of the country’s most ambitious bets yet on green hydrogen as an industrial decarbonisation weapon.
The fund focuses on large-scale energy transition projects across the green hydrogen value chain, including production and derivatives like green ammonia and green methanol.
It also aims to decarbonize traditionally hard-to-green industries such as steel, fertiliser, e-fuels, and chemicals.
What sets SA-H2 apart structurally is its blended finance architecture, deliberately built to pull private capital into a space public money alone can’t fill. Public capital is deployed strategically to absorb early risk, opening the door for institutional investors to step in behind it.
The fund runs on two tiers, a Development Tranche that provides early-stage risk capital and technical assistance to get projects to final investment decision and blended Equity Tranches that carry projects from financial close through to construction.
The Development Tranche drew commitments from anchor investors Invest International and the European Commission, through its Global Gateway strategy, alongside South Africa’s Industrial Development Corporation.
The Equity Tranches drew in heavier institutional weight, including South Africa’s state asset manager, the Public Investment Corporation, investing on behalf of the Government Employees Pension Fund; South African insurer Sanlam Life Insurance Limited; Invest International and the European Commission. The Development Bank of Southern Africa also backs the fund.
Andrew Johnstone, CEO of Climate Fund Managers, framed the milestone as validation of both the technology bet and the financing model behind it.
“As the energy transition progresses, industrial decarbonisation requires solutions beyond electrification, and green hydrogen has a critical role to play,” Johnstone said.
“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.”
The European Commission, whose Global Gateway strategy anchors part of the Development Tranche, cast the deal as proof of concept for its broader emerging-markets investment push.
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.”
Jeroen Plag, Chief Investment Officer at Invest International, said the milestone reflects a broader shift toward layered public-private capital structures built specifically to de-risk early-stage clean-energy development.
“Reaching first close of the SA-H2 Fund is a strong signal of investor confidence in the green hydrogen opportunity in Southern Africa,” Plag said.
“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.”
For South Africa’s pension and insurance capital, the fund offers a rare vehicle to align climate mandates with commercial returns. Lucky Pane, Head of Research and Innovation at the PIC, said the investment traces back to a hydrogen strategy the fund adopted in 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,” Pane said.
“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.”
Sanlam’s involvement extends a pattern of repeat backing for Climate Fund Managers’ vehicles. Mlondolozi Mahlangeni, Chief Actuary and Chief Risk Officer of the Sanlam Group, said:
“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.”
Rian Coetzee, Divisional Executive for Industry Planning and Project Development at the Industrial Development Corporation, tied the fund directly to South Africa’s industrial ambitions.
“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,” Coetzee said.
“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.”
Greg Fyfe, Chief Investment Officer at the Development Bank of Southern Africa, said the fund’s structure was built specifically to draw private capital into a sector requiring patient, layered risk-taking.
“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,” Fyfe said.
“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.”
Mphokolo Makara, CEO of SA-H2 Fund Managers, pointed to South Africa’s underlying resource endowment as the fund’s core investment thesis.
“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,” Makara said.
“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.”
The fund has already moved beyond capital-raising into project execution. SA-H2 has signed development funding agreements with Green Efuels Producers, a first-of-its-kind wastewater-to-green-methanol plant in South Africa’s Gauteng Province and the Hive Hydrogen Coega Green Ammonia Project, set to become South Africa’s first large-scale green ammonia production plant.
The ZAR 3 billion first close is a staging point, not the finish line. SA-H2 is targeting final close at a total fund size of ZAR 12 billion roughly $728 million, by mid-2028, meaning the fund has so far secured about a quarter of its ultimate target.
SA-H2 builds on a financing track record few emerging-market climate vehicles can match.
Climate Fund Managers’ earlier Climate Investor One and Climate Investor Two equity funds have together mobilised more than $2 billion for renewable energy, water, waste and ocean infrastructure across emerging markets.
The manager has since expanded beyond equity into private credit through the GAIA Climate Loan Fund, which reached its first close in 2025 and is targeting a final close of $1.48 billion in 2027 signalling that blended finance, once a niche instrument, is fast becoming the dominant model for funding Africa’s energy transition at scale.
