ARM-Harith Infrastructure Investments, a pan-African private equity fund manager focused on sustainable energy and infrastructure, raised $76 million at the first close of its Climate Transition Fund, which targets $200 million at final close. The fund combines US dollar and local currency investments within a single structure to attract African pension funds into climate and energy projects. The Lagos-based firm structured the fund to address a persistent currency mismatch problem that has kept domestic institutional capital on the sidelines of infrastructure investing. African governments face an estimated $400 billion development financing gap, while the continent's pension industry and collective investment schemes manage about $600 billion in long-term savings that remain largely untapped for infrastructure projects.
The first close is backed by $20 million from the African Development Bank's Sustainable Energy Fund for Africa (SEFA) and FSD Africa Investments, a UK-backed development finance investor. Such catalytic capital is often used to absorb part of the investment risk and encourage participation from private investors.
Fund Structure Addresses Currency Mismatch Challenge
Many infrastructure funds are structured in US dollars, while roads, power plants, fibre networks, and other assets generate revenues in local currencies. For pension funds, that creates a currency mismatch that can erode returns when local currencies weaken against the dollar. ARM-Harith's Climate Transition Fund allows local and hard-currency investments to coexist in the same vehicle, seeking to make infrastructure equity more attractive to domestic institutional investors while preserving dollar exposure for international backers.
"With our first fund, we demonstrated that domestic institutional capital can be mobilised into infrastructure equity," Rachel Moré-Oshodi, ARM-Harith's chief executive officer, said. "With this successor fund, we are building on that foundation by bringing local and hard-currency capital together within a single platform."
"The constraint has never been capital itself, but the absence of investment products structured to meet pension funds' liability-matching needs, particularly around tenure, risk allocation, and currency alignment," Anne-Marie Chidzero, chief investment officer at FSD Africa Investments, said. "Investment structure was designed to bridge that gap, enabling pension funds to participate in infrastructure equity."
African Pension Funds Control $600 Billion in Untapped Capital
Africa's pension industry and other collective investment schemes now manage about $600 billion in long-term savings that, in theory, should be well suited to infrastructure investments. The problem has been getting that money into projects. For years, startups, telecom operators, and governments have depended heavily on foreign investors and development finance institutions to fund critical infrastructure.
In the first quarter of 2026, European development finance institutions (DFIs), including DEG, Proparco, and British International Investment (BII), remained the most active investors in African private capital funds, according to research firm Stears, highlighting how dependent the sector remains on foreign capital.
As Africa's technology ecosystem matures, the conversation is gradually shifting from startup funding to the physical infrastructure needed to support digital growth. Data centres, telecom towers, fibre networks, embedded power systems, and renewable energy projects require patient capital with investment horizons measured in decades rather than years.
Development Finance Institutions Shift to Catalytic Investment Role
Development finance institutions are increasingly positioning themselves as catalytic investors, focused on crowding in domestic and local capital, rather than serving as the dominant source of funding. This shift has led DFIs to take minority positions in infrastructure funds and use concessional or anchor capital to de-risk deals for pension funds, insurers, and other long-term institutional investors.
In 2015, the African Development Bank (AfDB) launched Africa50 as an equity and project development platform that brings in African institutional investors alongside sovereign and development capital. It has supported projects such as Kigali Innovation City in Rwanda and the Benban solar complex in Egypt. In these deals, DFI capital helped de-risk early-stage project risks and enabled participation from pension funds and commercial lenders. By August 2025, it had crossed $1.4 billion in managed assets.
In 2025, the International Finance Corporation (IFC) launched its Catalytic First Loss Guarantee (FLG) Facility under its MSME Finance Platform. The facility provides first-loss guarantees to financial institutions in Sub-Saharan Africa, aiming to expand lending into SMEs, agribusiness, and climate-linked sectors by absorbing early credit risk.
The Emerging Africa and Asia Infrastructure Fund (EAAIF), managed by Ninety One, has also used AfDB and other development finance commitments as anchor capital to crowd in commercial lenders into African power and transport projects. This includes a $100 million AfDB facility structured to catalyse private investment into sustainable infrastructure.
ARM-Harith's Track Record Demonstrates Model Viability
ARM-Harith's first fund, ARM-Harith Infrastructure Fund I, which first closed in 2015 and backed projects like the Lagos-based energy supplier Elecktron Power Infracom, invested in transport and energy assets across West Africa, including power projects in Nigeria and Ghana.
According to ARM-Harith, the portfolio financed more than 700 megawatts of installed power capacity, supported roughly 22,500 jobs, and avoided an estimated 2.6 million tonnes of carbon emissions annually. Its more recent investments include distributed renewable energy platforms and embedded energy systems that reflect growing demand for decentralised power solutions, such as AD Power HoldCo's mini-grid and commercial energy projects serving multiple Nigerian communities, and Prime Meridian, a port infrastructure project in Ghana aiming to strengthen regional maritime trade in West Africa.
FAQ
What did ARM-Harith Infrastructure Investments raise at the first close of its Climate Transition Fund?
ARM-Harith Infrastructure Investments raised $76 million at the first close of its Climate Transition Fund, which targets $200 million at final close. The first close is backed by $20 million from the African Development Bank's Sustainable Energy Fund for Africa (SEFA) and FSD Africa Investments, a UK-backed development finance investor.
Why does ARM-Harith's Climate Transition Fund combine US dollar and local currency investments?
The fund combines US dollar and local currency investments within a single structure to address a currency mismatch problem that has kept African pension funds on the sidelines of infrastructure investing. Many infrastructure funds are structured in US dollars, while roads, power plants, and other assets generate revenues in local currencies, creating a mismatch that can erode returns when local currencies weaken against the dollar.
How much capital do African pension funds and collective investment schemes manage?
Africa's pension industry and other collective investment schemes manage about $600 billion in long-term savings. This capital remains largely untapped for infrastructure projects, while African governments face an estimated $400 billion development financing gap.
