The Private Financing Advisory Network (PFAN) is a global network of climate and clean energy financing experts, which offers free business coaching and investment facilitation to entrepreneurs developing climate and clean energy projects in emerging markets.
Since 2006, PFAN has been bridging the gap between promising entrepreneurs who may have difficulty finding access to funding and international investors who have difficulty finding good opportunities in low- and middle-income countries.
Climate mitigation and adaptation projects inducted into PFAN’s development pipeline receive support in a three-stage process known as The PFAN Journey. This journey was modernised in July 2020 to better adapt to entrepreneurs’ needs, as well as to better adapt PFAN’s processes to the Covid-19 pandemic.
After each stage, a review is conducted by PFAN’s Regional Coordinators to ensure the business is ready to proceed to the next stage, if not, PFAN provides guidance on the next steps to pursue. This has enabled closer handholding and guidance of the project developer by, not just the advisor, but also PFAN’s most senior project development specialists and investment facilitators.
This structure has provided PFAN with the flexibility to fast track advanced projects that would benefit from advancing from Stage 1 directly to Stage 3, or even repeat stages, for less mature projects, thereby better providing a more customer-oriented tailored service to PFAN’s entrepreneurs.
Since the launch of the revamped PFAN Journey, over 140 entrepreneurs across the globe have received PFAN support, of whom 93 and 37 of reached Stage 2 and Stage 3 respectively. Despite the effects of the pandemic, over 30 projects within the development pipeline have reached the end of the Journey with an investment successfully facilitated, thanks to PFAN’s intervention.
The PFAN Journey in Action
After five years of development, Thulo Khola Hydropower Project, one of PFAN’s 14 budding hydro projects in the Nepalese Himalayas, sought PFAN’s support in early September 2020.
October 2020: Acceptance into the PFAN Development Pipeline
PFAN’s regional evaluation panel and technical committee reviewed the entrepreneur's application and, considering its potential impact and maturity, decided to induct Thulo Khola Hydropower Project into the PFAN Journey.
November 2020: Stage 1 – Action Plan Development
Once the project was selected for PFAN support, the advisor, Sujan Paudel, developed a plan with the entrepreneur to further refine the financial model of the 21MW hydro project and develop its equity valuation.
December 2020: Stage 2 – Project Development
Mr Paudel implemented the plan as set out in Stage 1 and assisted the entrepreneur in further developing their business plan to get the project ready for investor introductions. Furthermore, Mr Paudel guided Thulo Khola on perfecting their investor pitch and coached them on how to best prepare and arrange their documents to meet prospective investors’ expectations.
March 2021: Stage 3 – Investment Facilitation
Upon Mr Paudel's request and approval by the Senior Coordinators, Stage 3 started ahead of schedule in mid-March 2021. Mr Paudel developed and customized PFAN Project Teasers for Thulo Khola which presented the project according to the targeted investors’ requirements. Various documents including a checklist for FDI with each party’s responsibilities and a Memorandum of Intent (to invest) as per prospective investor’s requirements were produced.
Investment leveraged
The project was able to secure USD 22M debt financing, and, with the PFAN Thailand Country Coordinator, Itty Varugis, Mr Paudel and Thulo Khola Hydropower Project are facilitating raise of a further USD 5M equity from another investor.
As a result of the revamped approach in providing support, the entrepreneurs supported by PFAN under the Journey have stated a higher level of satisfaction with the new process that provides a framework from which PFAN’s services are provided:
“During the coaching process, answers to the questions we asked and support were received from the consultant in full. The coach provided us with new skills and knowledge in the process of attracting investment for the project.”
“The coach contributed in our ability to understand the industry we operate, how to present convincing valuation of our business and difference between investor pitch deck and grant competition pitch deck.”
“Our project is better structured and positioned to start raising finance compared to how it was before. The coach helped incredibly to develop the business model and marketing strategy, as well as in building a robust financial model.”
