London-based investment manager Acre Impact Capital has secured a US$40mn investment from the European Investment Bank (EIB) for its first fund, aimed at boosting liquidity in Africa’s climate infrastructure sector.
Acre is currently in the process of setting up its Export Finance Fund, which will invest in the down payment portion of export credit agency (ECA)-backed transactions.
The fund, set to be closed by Q4 this year, will deploy finance to projects in four broad sectors, including renewable power; health, food and water scarcity; sustainable cities; and green transport.
ECA involvement in African infrastructure projects typically slashes the cost of debt for borrowers and encourages the participation of commercial lenders, yet the 15% down payment – short tenor commercial debt – must be paid at the outset.
“Whilst commercial banks generally fund the tranche guaranteed by an ECA, the availability of funding on the commercial debt tranche has been increasingly limited, with the situation worsening since the Covid-19 pandemic,” Acre Impact Capital says in a statement.
Investec Bank and the Industrial Development Corporation of South Africa are also backers of the fund, which continues to attract interest from other commercial and impact investors, multilateral development banks and development finance institutions.
In 2021, Acre Impact Capital secured catalytic investment from The Rockefeller Foundation and GuarantCo, which is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the UK, Switzerland, Australia and Sweden.
Acre’s fund will be primarily involved in high-volume ECA markets in Africa, though could also target those with historically less activity. The firm plans to open regional offices in Africa, initially in Kenya and South Africa.
Hussein Sefian, CEO of Acre Impact Capital says the fund is opening a “new asset class” for institutional investors to participate in ECA deals. “If we can get a proven track record, we can attract more investors and more liquidity to help finance essential infrastructure in Africa.”
The post Acre Capital secures EIB funding, readies Africa fund launch appeared first on Global Trade Review (GTR).