Two former PNB Paribas bankers now working for Impact managers, Acre Impact Capital has raised almost $100 million for a new fund that aims to spur billions of dollars in funding for climate-aligned infrastructure projects in Africa.
According to Reuters, Acre Impact Capital, a private-debt impact investment manager is looking to address the estimated $100 billion annual infrastructure financing gap on the continent by providing a portion of the unsecured funding for export finance projects.
Typically, it is expected that export credit agencies guarantee up to 85% of loans and require the client to raise the rest privately yet bank’s zeal to fund the remainder has declined as such projects carry a higher capital charge and can be hard to ensure.
As a result, as many as half of all deals that an export credit agency would back do not get done, Acre Chief Executive Hussein Sefian told Reuters.
- “We enable a transaction that would not happen otherwise as there is no insurance capacity and banks are not able to (without it),” he said. “We can come in and help them close a deal by providing that 15%, that’s really where we add value in the market,” Hussein added.
The Fund by Acre aims to back projects in areas including renewable energy, health, food, and water and will try to mobilize $5.60 private sector capital for each dollar invested. Acre will charge a management fee for running the fund.
Other financial institutions backing the fund include the European Investment Bank, commercial lenders including Standard Bank and Rand Merchant Bank, and specialist “impact” investors, looking to achieve a measurable social impact in a continent like Africa while making a profit.
What to Know
- Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Acre Impact Capital is looking to invest in Africa’s climate infrastructure while partnering with leading commercial lenders and export credit agencies.
- According to the United Nations Environment Programme Finance Initiative, Export credit agencies, such as UK Export Finance support some $250 billions of annual financing to emerging markets like Africa.
Multilateral development banks, such as the World Bank provide around $260 billion annually to emerging markets like Africa also.
