Tuesday, March 26, 2019 UTC

AGF Magazine - March 2019 issue

  • We focus on fixed income opportunities in both public and private markets. Read on to find in which fixed income instruments and in which African markets to invest on pp. 10-11. In addition, Ashley Benatar of Ashburton Investments shares his views on benefits and risks of investing in mezzanine debt on p.22.
  • We speak with Jérémie Ceyrac, Head of Equity, Responsible Investments at Proparco to learn more about the French development institution, financial products on offer, recent investments in Africa and African impact investment scene (pp. 13-15).
  • This month’s market feature focuses on Nigeria. Sven Richter, Fund Manager, Drakens Capital, writes about his recent trip to the West African country and his observations. “While Nigeria is attractive as an investment destination, the GDP growth is a disappointment for a county that we expect to be one of the leaders in Africa,” he says (pp. 16-17).
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News > Investors

ALCB Fund gets $50m from OPIC and AfDB

Anna Lyudvig
April 12, 2018, 10:10 p.m.

Word count: 547

Overseas Private Investment Corporation (OPIC) and the African Development Bank (AfDB) have invested $50m in the ALCB Fund to support high impact sectors in Africa focusing on housing, agriculture and SMEs.

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Overseas Private Investment Corporation (OPIC) and the African Development Bank (AfDB) have invested $50m in the ALCB Fund to support high impact sectors in Africa focusing on housing, agriculture and SMEs.

OPIC contributed $40m to the Fund while the African Development Bank is providing a senior loan of $10m to support the development of local currency corporate bond markets in Africa.

The latter loan was first local currency financing obtained by the ALCB Fund.

"The Board of the ALCB Fund and FSD Africa, on behalf of the UK government, greatly welcome the African Development Bank and OPIC as partners to the Fund," said Mark Napier, Director of FSD Africa based in Nairobi.

"These loans re-affirm both of these important organizations' strong commitment to the development of long term finance markets in Africa and allow the Fund to reach scale and maximize impact as an agent of change in African capital markets."

The Fund was incorporated in December 2012 by the German Development Bank (KfW), with initial paid-in capital of $47m.

Many local financial institutions and companies in Africa are new to capital markets transactions and to working with institutional investors.

The ALCB Fund engages with financial institutions and companies at an early-stage of the funding process, helping them to understand whether a bond issuance is the right path and the process involved. It also seeks to address a number of challenges in African capital markets, including limited primary issuances, price transparency, and limited participation by local market investors. 

Vitalis Ritter, Principal Project Manager at KfW, said: "With the participation of OPIC and the African Development Bank, the ALCB Fund has achieved two milestones. Firstly, it takes total committed funds to USD 180 million, maximizing the Fund's investment reach on the continent and its ability to mobilize domestic capital."

"Secondly, through the African Development Bank, the Fund is for the first time ever able to raise funding in a local currency from an African institution. Through the ALCB Fund, institutions from Germany, the UK and the US are joining forces with the AfDB to promote sustainable capital market development in and for Africa."

The OPIC loan will facilitate the Fund's participation in approximately 10 to 14 local currency bond issuances for institutions operating in financial inclusion, housing, agriculture, renewable energy and other developmental sectors throughout Africa.

Jim Polan, OPIC Vice-President for Small and Medium Enterprise Finance, said: "Capital markets in Africa are both a challenge and opportunity. This fund will have a tremendous impact by increasing the amount of long-term local currency financing available to companies operating in impact sectors. OPIC looks forward to working with its partners on this innovative fund and facilitating sustainable economic opportunities in Africa." 

"The development of well regulated, deep, effective and liquid financial markets in Africa is central to the African Development Bank's strategy," added Pierre Guislain, African Development Bank Vice-President in charge of Private Sector, Infrastructure and Industrialization.

"The contribution to the Fund complements our existing initiatives aimed at mobilizing domestic savings and stimulating non-sovereign debt capital markets for private sector growth across Africa. We welcome this opportunity and are proud to partner with institutions from Germany, UK, US and other African Development Bank Member Countries to finance Africa's Sustainable Development Goals and the Bank's High 5 priorities agenda."

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