Climate Fund Managers, an investment manager specialised in blended climate finance, announced on August 6, 2026 the first close of the SA-H2 fund, also known as Climate Investor Three (CI3) South Africa. The transaction gathers commitments of 3 billion South African rand (ZAR), or about $182 million, according to the company. Based in Cape Town, this private equity fund targets the green hydrogen value chain and the energy transition across Southern Africa.
A blended finance structure
The announcement comes amid a broader wave of green hydrogen project development across the African continent and beyond. The sector has recently seen Envision and Sasol studying a green hydrogen project in South Africa, while in Europe, Scotland approved a 15 MW green hydrogen project in Alness. SA-H2 combines public and private capital within a single platform, with public capital deployed strategically to balance risk and enable institutional investor participation, according to Climate Fund Managers.
The fund comprises a Development Tranche, intended to finance early-stage risk capital and technical assistance to prepare projects through to final investment decision, as well as blended Equity Tranches covering the period from financial close to project construction.
An international investor base
Commitments to the Development Tranche came from Invest International and the European Commission, via its Global Gateway strategy, as well as from the Industrial Development Corporation of South Africa (IDC). The Equity Tranches were subscribed by the Public Investment Corporation (PIC), on behalf of the Government Employees Pension Fund (GEPF), by South African insurer Sanlam Life Insurance Limited, as well as by Invest International and the European Commission.
The fund is also backed by the Development Bank of Southern Africa (DBSA). According to Climate Fund Managers, the first close reflects growing investor confidence in green hydrogen and its derivatives as a decarbonisation solution for hard-to-electrify sectors, including steel, fertiliser, e-fuels and chemicals.
Decarbonising hard-to-abate sectors
SA-H2 invests in large-scale energy transition projects spanning the entire green hydrogen value chain, including production, downstream derivatives such as green ammonia and green methanol, and the decarbonisation of heavy industries. Andrew Johnstone, chief executive officer of Climate Fund Managers, said industrial decarbonisation requires solutions beyond electrification and that green hydrogen has a critical role to play. According to him, Climate Investor Three is developing and scaling projects that give industrial users a low-carbon alternative.
Jeroen Plag, chief investment officer of Invest International, said the first close is a strong signal of investor confidence in green hydrogen’s potential in Southern Africa, with the layered capital structure allowing capital to be deployed more effectively and de-risking early-stage development. European Commissioner for International Partnerships Jozef SÃkela said the Global Gateway strategy helps create the right conditions for private investors to enter fast-growing markets, while supporting job creation and industrial development in South Africa. Lucky Pane, head of research and innovation at the PIC, said the investment aligns with the hydrogen investment strategy adopted by the institution as far back as 2022, intended to help its clients diversify their energy needs and meet their net-zero targets.
