The IDH Farmfit Fund has acted as anchor investor in Kenya’s first private-sector local currency securitisation in the smallholder agriculture sector, a transaction structured by Kaleidofin in partnership with agri-finance company Apollo Agriculture.

The deal marks a significant step in developing institutional capital markets for rural lending and demonstrates how structured credit markets can channel institutional capital toward smallholder finance.

The transaction involved the securitisation of smallholder farmer credit for agricultural inputs valued at KES 370 million, mobilising KES 276 million (approximately USD 2.1 million) through the sale of receivables originated by Apollo Agriculture.

The portfolio covers 23,839 smallholder farmers, of which 51% are women and about 22% are first-time borrowers. The issuance received an investment grade rating of BBB- from Agusto, signalling growing confidence in the credit quality of agricultural lending as an investable asset class.

“This transaction demonstrates how innovative financial structures can unlock capital for smallholder farmers at scale,” said Roel Messie, CEO of IDH Investment Management, which manages the IDH Farmfit Fund. “Building investable opportunities in agriculture requires both capital and enabling infrastructure, and this partnership brings those elements together.”

The securitisation was structured through Kaleidofin’s ki platform, which functions as dedicated debt capital market infrastructure for underserved segments. The platform enables the conversion of granular agricultural loans into investable securities in local currency, while allowing for customised structuring of portfolios and risk segmentation. It is supported by Kaleidofin’s proprietary ki score, an AI-driven risk intelligence system built on loan performance data, credit bureau inputs and alternative datasets.

For Apollo Agriculture, the structure provides immediate liquidity and improves capital efficiency, enabling the company to expand lending without increasing balance sheet leverage. The business uses a technology-driven underwriting model that combines satellite imagery of farmland, machine learning models trained on crop yield patterns and mobile-based farmer data to assess creditworthiness. This allows Apollo to extend financing to farmers who typically lack formal collateral or credit histories.

“This is a meaningful step in building efficient, scalable funding for smallholder agriculture and validates our tech-enabled business model,” said Eli Pollak, CEO of Apollo Agriculture. “By converting receivables into working capital, we are able to lower our cost of funds and expand access to affordable, local currency financing for farmers.”

Local currency financing is a key feature of the structure, reducing exposure to foreign exchange volatility that can significantly increase repayment burdens for farmers. By lowering funding costs, Apollo is able to offer more affordable credit terms, improving repayment capacity and supporting long-term financial resilience at the farm level.

The transaction also strengthens the development of structured finance in Kenya’s agricultural sector, where access to institutional capital has historically been limited. The securitisation has been designed to align financing with seasonal agricultural cycles, allowing capital to be recycled efficiently while improving transparency on underlying asset performance.

“This transaction showcases how well-functioning market infrastructure can catalyse institutional capital for sectors traditionally considered high-risk, like smallholder agriculture,” said Dr. Evans Osano, Chief Financial Markets Officer at FSD Africa. “Our role has been to help build the foundations — from regulatory clarity to investor confidence — that make transactions like this viable and repeatable.”

Kaleidofin’s platform plays a central role in enabling scalability. “We designed the Kaleidofin platform to function as scalable market infrastructure for traditionally excluded customer segments such as smallholder farmers, women entrepreneurs, clean energy and small business,” said Sucharita Mukherjee, Co-founder and CEO of Kaleidofin. “By enabling customised structuring and data-driven risk insights via ki score, we are building the foundations for institutional capital to flow into sectors such as smallholder agriculture in a sustainable way.”

The transaction is expected to serve as the first phase of a broader securitisation programme that could mobilise approximately KES 2.37 billion and reach more than 130,000 farmers over time. It also reflects coordinated support from development finance and market-building institutions. FSD Africa provided support on legal and regulatory structuring, investor engagement and market development, while the UK’s MOBILIST programme contributed tax and structuring guidance.

British International Investment (BII), the UK’s development finance institution and impact investor, supported Apollo Agriculture through technical assistance under its BII Plus programme, strengthening its reporting and technology systems to enable access to scalable, local currency funding.